Simandou gets murkier - suits ahoy

Thursday, 1 May, 2014

The fallout from BSGR’s corrupt behaviour in Guinea continues. The country’s President Alpha Condé has recently gone on record to say he hopes BSGR’s JV partner Vale rebids for the rights to the Simandou iron ore asset recently removed from BSGR, despite Vale already having spent a billion dollars on its involvement in Guinea.

This piece on Mineweb points out that Vale were not found to have been implicated in the original corruption, so are free to rebid - but whether there’s much chance of that given the money spent already, and yet fact that BSGR are still protesting the decision, remains to be seen. 

This further piece also suggests that BSGR may have seen this coming: back in March the company said ”BSGR places the government of Guinea on notice that any steps taken to conclude its pre-determined outcome [of seizing Simandou] without addressing basic due process and procedural fairness will result in international arbitration against the Republic of Guinea.” 

The plot thickened further this week, however, when the lawsuits started kicking off - and not all in the way one might have expected. Vale started on Monday, filing an action against BSGR before the London Court of International Arbitration, as per this report in Swiss paper Le Temps [French, paywall]. That process and its implications are summarised nicely - in English, for free - in this further piece on

Aaand then, you will note if you’ve just read that, from stage left enter Rio Tinto with another lawsuit against Vale and BSGR (further background info here). The beef here: “Rio Tinto… spent years of work and several billions in the southern part of [Simandou] filed its own lawsuit against both Vale and BSGR for what it qualifies as a “steal” of its previously-owned concessions… The London-based miner claims Vale used “highly confidential and proprietary information” in its favour, after realizing that gaining control of the Simandou deposit would strengthen its position in the world’s high-grade iron ore market.”

In the words of the suit:

Defendant Vale saw a golden opportunity to not only obtain that control, but to do so on the cheap, when Vale learned from Rio Tinto that Defendants Steinmetz and BSG Resources Limited (collectively with its named subsidiaries and affiliates, “BSGR”) were attempting to interfere with and steal Rio Tinto’s rights to the Simandou concession. Given BSGR’s reputation for corruption and bribery—well known among those active in the mining industry, including Vale— Vale was on notice that Steinmetz’s and BSGR’s efforts to misappropriate Rio Tinto’s rights included bribing various Guinean officials.

We suspect there’ll be more to come on this, a lot more. It’d be fair to assume Vale may well hold fire for a while as regards re-bidding to the Guinean government. Watch this space.


IMAGE: Clash of the titans, Kolomon Moser, c.1915