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Steinmetz’s BSGR Says Guinea Recommends Seizing Simandou

March 8 (Bloomberg) -- A Guinean review into ownership of the biggest untapped iron-ore deposit has recommended seizing mining rights owned by a venture of Beny Steinmetz’s company BSG Resources Ltd. and Brazil’s Vale SA.

A government committee set up in 2012 to review mining agreements has advised the West African country to seize the licenses “and terminate existing legal agreements,” BSGR said yesterday in an e-mailed statement sent to Bloomberg News by external public relations firm Powerscourt. BSGR was informed of the recommendation in a letter from the committee to its venture with Rio de Janeiro-based Vale, known as VBG, it said.

A final ruling by the Guinea government endorsing the review’s findings would obstruct Steinmetz, 57, from pursuing his plan to develop the Simandou deposit with a $10 billion mine, port and rail project. The recommendation from Guinea comes less than a year after a U.S. grand jury began considering whether bribes were paid by a man linked to BSGR, Frederic Cilins, to a wife of former President Lansana Conte to help the company win licenses over the ground.

The government committee’s letter “provides no substance to support its recommendations other than making reference to allegations that BSGR has robustly and repeatedly denied,” Guernsey-based BSGR said. The review “is part of a pre-determined and orchestrated plan to expropriate the company’s legally-acquired mining rights,” it said.

International Arbitration

“BSGR places the government of Guinea on notice that any steps taken to conclude its pre-determined outcome without addressing basic due process and procedural fairness will result in international arbitration against the Republic of Guinea,” it said.

A spokesman for the Rio de Janeiro-based company declined to comment on the review. Nava Toure, president of Guinea’s Technical Committee for the Review of Mining Agreements, and President Alpha Conde’s spokesman Moussa Cisse couldn’t be reached for comment.

Vale owns a 51 percent stake in VBG, with BSGR holding the remainder. Rio Tinto, 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, which sold the stake to Vale in 2010 in a deal worth as much as $2.5 billion. Rio said in August it would be interested in regaining control of the disputed iron-rich ground.

Steinmetz, who is Israel’s richest person and has a net worth of about $6.8 billion, according to the Bloomberg Billionaires Index, amassed his fortune initially in the diamond trade, according to his personal website.

Gifts, Payments

In November, Guinea asked VBG to provide details of gifts and payments allegedly passed to Guinean officials to help the companies gain access to the ground in 2008, according to a letter sent to BSGR’s operation in the country and seen by Bloomberg News.

The allegations were originally made in 2012 and have always been denied by BSGR. Guinea asked for details of any gifts or payments made to the now deceased Conte, military figures, former Mines Minister Mahmoud Thiam -- once an adviser to UBS AG and Bank of America Corp. -- and Conte’s fourth wife.

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 intends 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.

To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Alex Devine

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