MAC: Mines and Communities

Guinea: the battle for Simandou renews

Published by MAC on 2020-07-01

Some lawyers haven't been allowed to rest on their elbows, during these fraught, uncertain, disease-infected times; albeit in a battle that's being played out on paper.

The tussle for control over potentially the world's  largest new iron-ore resource - Guinea's Simandou -  has re-surfaced, between discredited Vale of Brazil and the equally discreditable Israeli diamontaire Beny Steinmetz [see:  Steinmetz versus Vale ].

For the present, Rio Tinto, is keeping "socially distanced" from the two contenders, although doubtless still seeking to gain control of  the entire, hitherto-disaggregated, deposit.

Meanwhile, the government of Guinea, which asserted its rights to own Steinmetz's share of Simandou in 2014, remains kept "out of the picture". The state has been riven by major acts of violence from both citizens and paramilitary forces in response to the ravages of Corona Virus. 

[Comment by Nostromo Research]

Vale asks court to dismiss Steinmetz request for documents

Cecilia Jamasmie

29 June 2020

Brazil’s Vale (NYSE: VALE), the world’s top iron ore producer, is urging
a US court to reject billionaire Beny Steinmetz’s attempt to open a new
front in the battle over lost rights to the massive Simandou iron ore
project in Guinea.

Steinmetz is the founder and owner of BSG Resources, the company
embroiled in a long-drawn-out dispute with Vale over Simandou. He said
in May he had fresh evidence that will help him reverse a London Court
of International Arbitration $2bn award to Vale.

The diamond mogul asked the New York-based court to force Vale to
provide documents, which could allegedly prove the company was aware of
potential problems with how the rights to develop Simandou had been

Vale retaliated on Friday, asking the judge to dismiss Steinmetz’s
request, which it said was just a “transparent publicity stunt” crafted
to divert attention away from his alleged fraudulent behavior.

The case goes back to 2010, when Vale agreed to buy 51% of the iron ore
licenses belonging to BSGR, Steinmetz’s mining arm.

Four years later, Guinea revoked both Vale and BSGR’s rights over the
massive iron ore deposit.

The decision followed a government probe that concluded they obtained
their licenses through corruption, allegations that Steinmetz and BSGR
have always denied.

Vale then filed a successful claim against its former partner company in
the London Court of International Arbitration to recover an upfront
payment to BSGR and money it invested in Guinea.

The figure requested and later awarded by a London arbitration court
amounted to $1.25 billion plus interest and costs, totalling $2 billion.

Steinmetz says the evidence, gathered by private intelligence agency
Black Cube, will also allow him to serve subpoenas on Rio Tinto (ASX,

The Australian miner, the world’s second largest iron ore producer,
still holds a 45% stake in the other half of Simandou, which it is
actively planning to develop.

State-controlled Chinalco owns 40% and the Guinea government 15%.

Face off

Vale opened a new chapter in its battle with Steinmetz in early May. At
the time, it asked a US court to determine whether funds paid to BSGR
within the framework of their former Simandou partnership in Guinea were
used for property investments in the US.

The company expects to prove its former partner in Guinea fraudulently
funneled $500 million into Manhattan real estate magnates Aby Rosen and
René Benko.

Steinmetz, in turn, alleges Vale is holding off key documents that would
prove the company was aware of potential bribery or “red flags” when it
entered into a partnership with BSGR, but “chose to close its eyes.”

At two billion tonnes of iron ore, with some of the highest grades in
the industry, Simandou is one of the world’s biggest and richest
reserves of the steelmaking material.


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