(Minews) - In a new and unexpected twist in the battle to control Guinea’s rich Simandou iron ore deposits, the companies once operating in the area have began a series of billion-worth lawsuits, with iron ore miner No.2 Rio Tinto, suing the world's largest producer Brazil’s Vale.
The first one to shoot was Vale, which filed Monday an action against his former partner in Guinea BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz’s empire, before the London Court of International Arbitration, Swiss newspaper Le Temps reports (in French).
One of the paper’s sources said Vale is seeking a minimum compensation of US$1.1 billion, due to losses suffered because BSGR’s actions in Guinea. Last week, The West African nation concluded that BSG Resources obtained the Simandou and Zogota concessions through corrupt practices and decided to revoke all mining rights for both companies.
Vale had a 51% stake in the project, which acquire from BSGR in 2010 in a $2.5bn deal.The company however only paid $500 to Steinmetz’s firm, suspending all instalments left as soon as it learned of the accusations against its partner.
Guinea’s President Alpha Conde said Wednesday it was clear the Rio de Janeiro-based firm did nothing wrong, adding the mining giant is free to reapply to acquire rights to one of the largest untapped iron ore deposits in the world.
According to AP, Conde told reporters in Geneva today the country would welcome a new bid from Vale, but it had no preference among bidders and would select one transparently.
When contacted about it, a BSGR spokesman told MINING.com it had no comments, adding the company was “looking forward to proving the truth through due legal process by prosecuting our rights in the very near future against the Guinean Government.”
Here comes Rio Tinto
MINING.com learned Wednesday that mining giant Rio Tinto, which has spent years of work and several billions in the southern part of the $20 billion Simandou iron ore project, has filed its own lawsuit against both Vale and BSGR for what it qualifies as a “steal” of its previously-owned concessions.
In the 50-page document submitted today in a New York court, and posted later in Rio's website, the company argues it held talks with the Brazilian miner in 2008 to determine whether they “could agree to terms on Rio Tinto’s interest in Simandou.”
The London-based miner claims Vale used that “highly confidential and proprietary information” in its favour, after realizing that gaining control of the Simandou deposit would strengthen its position in the world’s high-grade iron ore market, as the only other comparable source is Vale’s own Carajas Iron Ore Mine in Brazil.
In an unusually hostile language when it comes to legals documents, Rio claims Vale knew of BSG ways:
Defendant Vale saw a golden opportunity to not only obtain that control, but to do so on the cheap, when Vale learned from Rio Tinto that Defendants Steinmetz and BSG Resources Limited (collectively with its named subsidiaries and affiliates, “BSGR”) were attempting to interfere with and steal Rio Tinto’s rights to the Simandou concession. Given BSGR’s reputation for corruption and bribery—well known among those active in the mining industry, including Vale— Vale was on notice that Steinmetz’s and BSGR’s efforts to misappropriate Rio Tinto’s rights included bribing various Guinean officials.
In the lawsuit Rio adds that Vale was “at the heart” of a conspiracy to take over the largest untapped iron ore deposit in the world. The miner's claim also names Mahmoud Thiam, a former Guinean mining minister, among the alleged conspirators in the scheme to steal its assets. It alleged that he received a $200m bribe from Steinmetz for facilitating the granting of mining licenses to BSGR for the half of Simandou that had been stripped from Rio.
Rio has already spent over $3 billion actively building its project in the southern part of what is considered one of the world's largest untapped deposits of iron ore. At full production Rio's Simandou mine, to begin production by 2019, would export up to 95 million tonnes per year – that's about a third of the firm's total capacity at the moment.
