Australian mining giant Rio Tinto Ltd. (NYSE; LSE; ASX: RIO) accuses Brazil's Vale SA (Bovespa: VALE5; NYSE: VALE) and Beny Steinmetz and his BSG Resources Ltd. of conspiracy to steal its rights in Guinea's Simandou iron-ore concession. It claims that Steimetz gave former Guinean Minister of Mines Mahmoud Thiam a $200 million bribe to acquire the mine, after it had been seized from Rio Tinto.
In early 2010, Steimetz sold 51% of BSG Resources unit BSG Guinea to Vale for $2.5 billion, of which $500 was to be paid immediately, and the rest in milestone payments. BSG Guinea's value is because of its rich iron ore concessions in the country.
In the statement of claim filed with the US District Court for the Southern District of New York, Rio Tinto says that it had spent hundreds of millions trying to develop Simandou until 2008, when former President Lansana Conte's government revoked its permit on the northern half of the deposit and then transferred it to BSG Resources. Rio Tinto is asking for “compensatory, consequential, exemplary and punitive damages…. In an amount to be determined at trial."
In April, a Guinean government inquiry concluded that Steimetz acquired the rights to the Simandou mine through corruption under previous dictatorships, and stripped him and Vale of their rights.
Rio Tinto claims, “By feigning interest in a deal related to Simandou, Vale and its co-conspirators were able to gain access to key confidential and proprietary information from Rio Tinto, which defendants then used for their own development of Simandou."
According to "The Financial Times", BSGR said, “Rio Tinto chose to do nothing with its mining rights so the mining rights were taken away. Baseless and bizarre lawsuits like this won’t change that fact," It added, "BSGR has previously denied all allegations of corruption. It has said it will “prove the allegations raised in Guinea’s rigged and illegitimate [inquiry] are false” and has threatened to take Guinea to international arbitration."
Published by Globes [online], Israel business news - www.globes-online.com - on May 1, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014