Steinmetz’s BSG Ready to Use Law and Arbitration Over Guinea OreThomas Biesheuvel and Jesse Riseborough
BSG Resources Ltd., a mining company controlled by Israel’s richest man, is prepared to use the law including international arbitration to prevent Guinea stripping it of one of the world’s most valuable iron-ore deposits.
“BSGR will defend its reputation and its mining rights in Guinea through whatever legal means prove necessary, including international arbitration, if the Government of Guinea continues with its illegal efforts to expropriate BSGR’s interests,” the company held by Beny Steinmetz said in an e-mailed statement.
BSG in March said Guinea was preparing to cancel its mining rights to the Simandou and Zogota projects. Two BSG officials were also arrested after investigations by the U.S. Department of Justice and Guinea, the African nation’s Justice Ministry has said. In addition, A French citizen with ties to BSG was charged with obstructing a U.S. probe into whether bribes were paid to win mining rights, a criminal complaint filed in New York shows.
Work at both sites, held in a venture with Vale SA, was frozen last year. Vale, the world’s biggest iron-ore exporter, says U.S. and Guinea investigators assured the company it’s not under any suspicion. Simandou, with an estimated value of $50 billion, is in the iron-laden mountains of southeast Guinea.
The U.S. Department of Justice said on April 15 that it was investigating the possibility of a payment of bribes to win “lucrative mining rights.” That followed a probe by Guinea begun in 2012 into how BSG gained its permits.
“Allegations that there was anything improper about the manner in which BSGR obtained mining rights in Guinea are entirely baseless and form part of a sustained smear campaign against the company,” BSG said in the e-mailed statement. The business “was awarded its permits because it was prepared to act decisively and take quick decisions and, unlike most major mining companies, did not view Simandou as a strategic asset for the benefit of its future reserve estimates.”
BSG acquired rights to part of Simandou in 2008 after Rio Tinto Group was ordered by Guinea to give up a section of its license. BSG subsequently sold 51 percent of its stake in Simandou and Zogota to Vale in 2010 for $2.5 billion. The venture had planned a $10 billion mining operation before a dispute with the government escalated from last year.
Steinmetz, 57, has a net worth of about $8.8 billion, according to the Bloomberg Billionaires Index.