Guinea Says Vale Stake Protected Regardless of Review
Guinea will seek to preserve Vale SA’s (VALE3) interests in Simandou, one of the world’s largest untapped iron-ore deposits, even though its partner is being investigated on corruption allegations, President Alpha Conde said.
“In the case of Simandou 1 and 2, Vale already made an investment,” Conde, 75, said in an interview in Abu Dhabi. “It’s out of the question to hurt Vale; at the same time, the law should be obeyed, so we’ll have to find a solution.”
Israeli billionaire Beny Steinmetz’s BSG Resources Ltd. sold 51 percent of its stake in part of the Simandou area to Rio de Janeiro-based Vale in 2010, in a deal valued at as much as $2.5 billion. BSGR gained the mining rights after Rio Tinto Group (RIO), the world’s second-biggest mining company, was stripped of two of the four blocks of land in Simandou in 2008. Rio said in August it would be interested in regaining control of the disputed concession.
Steinmetz is Israel’s wealthiest person, with an estimated net worth of about $7.4 billion, according to the Bloomberg Billionaires Index. Steinmetz was interviewed by Geneva’s public prosecutor last month as part of a widening investigation involving at least four nations into how BSGR came to control half of one of the world’s richest iron ore deposits. BSGR and Steinmetz have denied any wrongdoing.
Conde declined to say in yesterday’s interview whether the concession would be offered to bidders again or given back to Rio Tinto should BSGR’s contract be canceled. “It’s in the hands of the justice, I cannot speak about it,” he said.
The final hearing of a government committee probing how BSGR acquired the ground will be held Dec. 10 in the capital Conakry, according to a letter sent to BSGR’s venture in Guinea two weeks ago and seen by Bloomberg News. It asks BSGR to clarify responses to allegations made last year that payments and gifts were given to government and military officials from 2005 to help it obtain the site. BSGR has denied these claims.
BSGR said the review is an attempt to “expropriate illegally” its mining rights, including the Simandou deposit. Vale lost 0.5 percent to 32.51 reais at 11:49 a.m. in Sao Paulo trading today.
Conde said he met yesterday with Rio and its Chinese partner in the Simandou concession, Aluminum Corp. of China, or Chinalco.
“We all expressed our will to go very fast, as iron prices are going up with China and Japan starting steel projects,” he said, without giving a date for the start of mining.
Guinea in March announced plans to more than triple bauxite production capacity by 2020 as Chinese demand for the metal is forecast to rise.
The West African nation, the largest exporter of the mineral that makes aluminum, has eight projects under development including a deal with Mubadala of Abu Dhabi to boost production capacity of the Cie des Bauxites de Guinee and one with United Co. Rusal to build an alumina refinery.
Conde said another agreement will be signed today with Mubadala.
“What we want is to have long-term strategic ties with mining companies, similar to what Botswana has with diamond producer De Beers, so that market fluctuations don’t have an impact on our relations,” Conde said. “Our aim is to have total transparency.”
The southern African nation of Botswana is the largest producer of the gem. Anglo American Plc bought a 40 percent stake in De Beers last year, increasing its holding to 85 percent, and moved its gem-sorting and trading operations to the Botswanan capital of Gaborone from London. The government owns the remaining 15 percent stake in De Beers.
To contact the reporter on this story: Maher Chmaytelli in Dubai at email@example.com
To contact the editor responsible for this story: Antony Sguazzin at firstname.lastname@example.org