Guinea strips BSGR and Vale of mining permits

Published by MAC on 2014-04-21
Source: Reuters

Guinea cancels BSGR, Vale iron ore mining permits

Saliou Samb

Reuters

18 April 2014

Guinea's government has accepted a report recommending the cancellation of two iron ore concessions held by BSG Resources and its joint venture partner, Brazilian miner Vale, a spokesman said on state television on Thursday.

A technical committee charged with reviewing the West African nation's mining deals released a report last week accusing BSGR, the mining branch of Israeli billionaire Beny Steinmetz's conglomerate, of obtaining the rights through corruption.

The committee's report recommended that Guinea withdraw the mining permit held by VBG, the joint venture of BSGR and Vale, in the giant Simandou iron ore deposit and cancel its Zogota mining concession.

"The cabinet approves the recommendations of the technical committee," government spokesman Damantang Albert Camara said, adding that the decision was linked to the "fraudulent nature of the conditions in which the permits were granted."

Reuters reported earlier on Thursday that the committee's recommendations would be approved, citing a senior government source. The same source said the contracts would be officially canceled via a presidential decree late on Thursday evening.

BSGR has denied the allegations and said it would seek international arbitration.

"BSGR obtained the mining rights lawfully and will mount a vigorous effort to overturn this decision, which is as predictable as it is unlawful," BSGR said in a statement sent to Reuters.

Officials for Vale, the majority shareholder in the VBG venture, were not immediately available for comment.

Vale, the world's largest iron ore producer, did not participate in the corrupt practices, the report found, as it was not involved in acquiring the licenses.

While the committee called for the government to exclude VBG from any future process to re-allocate the licenses, Vale may be able to bid for the permits on its own.

According to a source close to the Brazilian miner, the company had spent more than $1 billion on its Guinean venture when it put the project on hold at the end of 2012.

With reserves of iron ore, gold, bauxite and diamonds, Guinea is one of Africa's richest countries in terms of resources, but it remains one of the world's poorest in terms of development, ranking 178th out of 187 countries in the U.N. Human Development Index last year.

(Additional reporting by Silvia Antonioli in London and Jeb Blount in Rio de Janeiro; Writing by Joe Bavier and Emma Farge; Editing by Daniel Flynn and Steve Orlofsky)

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Guinea's Cabinet Accepts Simandou Mining Probe Findings

Decision Could Lead to BSG Resources, Vale Being Stripped of Their Licenses

Alexis Flynn

Wall Street Journal

17 April 2014

LONDON - Guinea's cabinet has voted to accept the findings of a government committee set up to probe the country's mining deals, which last week recommended that BSG Resources Ltd. and Vale be stripped of their rights to the Simandou iron-ore project, two people familiar with the matter said Thursday.

A presidential decree revoking the licenses held by the two companies is expected "imminently," the people said.

The unanimous decision, made at this afternoon's weekly cabinet meeting in Conakry, comes little more than a week after the publication of a long-awaited government report into how privately-owned BSG Resources secured rights to one of the mining world's most coveted prizes, a roughly 600-square-kilometer iron-ore concession in the West African nation's Simandou Mountains.

In its final report, the committee-made up of Guinean government bureaucrats-said it found "precise and coherent evidence" that Africa-focused BSG Resources had obtained the rights to Simandou through corruption, according to a copy of the report reviewed by The Wall Street Journal. After obtaining the rights in 2008, BSG Resources sold a 51% stake in the project to Brazilian mining company Vale for $2.5 billion in 2010.

BSG Resources has vehemently denied any wrongdoing and has accused Guinea's president, Alpha Condé, of seeking to expropriate it by stealth. It has said it plans to challenge the report's findings in international arbitration.

"BSGR obtained the mining rights lawfully and will mount a vigorous effort to overturn this decision, which is as predictable as it is unlawful," a spokesman told The Wall Street Journal.

Vale has also consistently denied any wrongdoing and said that the allegations of impropriety pre-date its investment in the country.

The committee also recommended that BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz's family conglomerate, be barred from participating in any retendering of the licenses. However, the committee didn't recommend that Vale be similarly excluded.