Guinean review finds against BSGR in long-running saga

Published by MAC on 2014-03-14
Source: Bloomberg, Reuters

BSGR says Guinea recommends seizing mine with Vale

Jesse Riseborough & Franz Wild

Bloomberg

10 March 2014

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.

--With assistance from Ougna Camara in Conakry, Andy Hoffman in Geneva and Juan Pablo Spinetto in Rio de Janeiro.

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Rio Tinto seeks to finalise Simandou investment plan

Reuters

7 March 2014

CONAKRY - Global miner Rio Tinto pledged on Thursday to press ahead with finalising an investment framework for the long-delayed Simandou iron ore project and said it would seek ratification from parliament as soon as possible.

West Africa's Guinea confiscated half of the giant Simandou project in 2008, accusing Rio of moving too slowly, but the two sides settled differences in 2011 and it is seeking to develop the southern half. The company pushed back its start date by at least three years to 2018 last year, without giving a reason.

"The parties have affirmed their commitment on the Simandou project. They have agreed that the priority is to agree the investment framework on which they are working relentlessly and to ratify it by the parliament as soon as possible," Rio Tinto said in a statement.

It added that after the project was ratified, it would aim to complete a banking feasibility study by early 2015.

The pledge follows a meeting in late February between Rio Tinto management and President Alpha Conde, the group added.

Guinea had previously committed to providing 51 percent of project's costs although sources close to the negotiations have since said it does not have the funding available.

Simandou, one of the largest untapped deposits of iron ore, is expected to cost up to $15 billion and could turn the country into a major exporter of iron ore.

The right to develop the northern part of the deposit is held by the mining arm of Israeli billionaire Beny Steinmetz BSG Resources.

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Man pleads guilty to obstruction in Guinea mine scandal

Bob Van Voris

Bloomberg

11 March 2014

A French citizen with ties to billionaire Beny Steinmetz and his BSG Resources Ltd. pleaded guilty to interfering in a U.S. grand jury probe of bribes allegedly paid to win mining rights in Guinea.

Frederic Cilins, 51, entered his plea to a single count of obstructing a government investigation in a hearing today in Manhattan federal court. Cilins's plea agreement with the government doesn't require him to cooperate in its investigation.

Prosecutors had charged Cilins with trying to pay Mamadie Toure, the fourth wife of Guinea's late President Lansana Conte, to lie to investigators and to turn over documents for Cilins to destroy.

Prosecutors claimed Cilins has a "very close personal relationship" with Steinmetz, who controls BSGR and is Israel's wealthiest person. The U.S. said Cilins was negotiating with Toure on behalf of BSGR and Steinmetz when he was arrested April 14 at the airport in Jacksonville, Florida.

Mining Concession

Since about January 2013 the grand jury in New York has been investigating possible violations of the Foreign Corrupt Practices Act and criminal money-laundering in connection with money intended to be used to bribe officials of Guinea's government for an iron-mining concession in the country's Simandou region, according to the government.

Cilins said he worked in 2005 and 2006 for BSGR as a go- between with Guinea in the company's efforts to secure mining rights in the region.

Cilins faces as long as five years in prison when he's sentenced June 27. Lawyers for Cilins and the government agreed that federal sentencing guidelines, which aren't binding on the judge, call for Cilins to get from 37 to 46 months in prison.

Cilins originally was charged with witness tampering, obstructing a criminal investigation and destruction of evidence. The witness-tampering and evidence-destruction charges carry maximum prison terms of 20 years.

He has been held in U.S. custody without bail since U.S. District Judge William H. Pauley III ruled in July that he presents "a serious risk of flight." Cilins's guilty plea avoids a trial that was scheduled for March 31.

The case is U.S. v. Cilins, 13-cr-00315, U.S. District Court, Southern District of New York (Manhattan).