Feb. 11 (Bloomberg) -- The mineral-rich West African nation of Guinea has completed a review of a 2008 agreement with Beny Steinmetz’s BSG Resources Ltd. that saw the company gain control of part of the world’s largest untapped iron-ore deposit.
A government committee will now notify the company of its conclusions, Nava Toure, head of the review, said today by phone in the capital, Conakry, without disclosing any details. The investigation started in 2012. BSGR owns 49 percent of a venture, VBG, that controls licenses covering the Simandou project. Brazil’s Vale SA owns 51 percent.
Plans by Steinmetz to spend $10 billion building an iron-ore rail, port and mine complex with Vale were halted after what started as a Guinean review into how his company gained the rights widened to at least four other nations. In April, a U.S. grand-jury began looking at whether bribes were paid by a man linked to BSGR, Frederic Cilins, to a wife of former Guinean President Lansana Conte.
Steinmetz and BSGR, based in Guernsey, deny wrongdoing and say they are the victims of attempts by Alpha Conde, Guinea’s president since 2010, to revoke the company’s mining license. The venture with Vale “was created with the blessing of the government and remains Guinea’s best chance of achieving production at Simandou,” BSGR said in e-mailed comments today.
“The committee is using fabricated evidence, but the reality is BSGR followed the law,” the company said. “The extraordinary manner” in which the review was done shows that the “committee was established to provide a pretext to illegally seize our assets in Guinea.”
Vale declined to comment. The Rio de Janeiro-based company, the world’s biggest exporter of iron ore, paid BSGR $500 million as part of a 2010 deal giving it 51 percent of the ground for as much as $2.5 billion.
The recommendations of the Guinea review committee, which has the power to advise the government to revoke the license, will be passed on to another committee that includes ministers, Toure said.
Guinea, the world’s biggest exporter of bauxite, ranked 150 out of 177 in Transparency International’s 2013 Corruption Perceptions Index. In November the government asked the Vale-BSGR venture to provide details of gifts and payments allegedly passed to Guinean officials to win access to the ground in 2008, according to a letter sent to BSGR’s operation in the country and seen by Bloomberg News.
The country plans to preserve Vale’s interest in Simandou, Conde said in a Nov. 25 interview in Abu Dhabi.
Simandou is an important project for Vale and it plans to wait for the outcome of Guinea’s review process before making any decisions about future development, Clovis Torres, the company’s general counsel, told reporters Dec. 5 in London.
Steinmetz, who has a net worth of about $6.6 billion, according to the Bloomberg Billionaires Index, amassed his fortune initially in the diamond trade, according to his personal website.
Rio Tinto Group, the world’s second-biggest mining company, was stripped of two of the four blocks of land making up the Simandou deposit in 2008. Rights to the ground were subsequently transferred to BSGR. Rio said in August it would be interested in regaining control of the disputed iron-rich ground.