Bre-X’s fake gold mine

In 1989, Canadian businessmen David Walsh founded the Bre-X mining company, which would find itself at the centre of a scandal so infamous it inspired the 2016 film Gold. In 1993, the company bought land near the Busang River on the Indonesian island of Borneo on the recommendation of geologist John Felderhof, and within a year, the company had struck gold, reporting reserves of around 8 million ounces.

By 1997, Bre-X’s stock price had skyrocketed to around $209 per share, giving the company a market capitalisation of $4.4bn, equal to $6.9bn in 2018, and companies including Barrick Gold were interested in the project. Analysts from JP Morgan encouraged investment in the mine, which was now claiming to have reserves of 200 million ounces.

However, these reserves were a complete fabrication by project manager Michael de Guzman, a struggling geologist who had convinced first Felderhof, and then Walsh, of the potential of the mine. He mixed the mined ore with gold shavings from his wedding ring to give the impression of deposits rich in gold, and eventually paid local gold panners around $61,000 between 1994 and 1997 to continue the deception after he ran out of gold.

In 1997, Bre-X, Indonesia and US miner Freeport McMoRan agreed on a joint venture deal for the mine after Indonesia revoked Bre-X’s mining licence. The fraud was exposed when Indonesian and American miners failed to find any of the promised gold through their own exploration efforts.

Bre-X’s shares crashed and the company eventually folded in 2003. Walsh, who claimed to be ignorant of the fraud, worked with Canadian officials on an investigation until his death from an aneurysm in 1998. Felderhof was found not guilty of insider trading in 2007, and was the only man tried in connection with the scandal.

De Guzman’s fate, however, is much less clear. Officially, he died in 1997, jumping from a helicopter to his death ahead of a meeting with Freeport miners. However, his body is reported to have been missing the face, hands and feet, and to have been attacked and eaten by wild animals prior to its discovery, making identifying the remains difficult. John McBeth, a journalist working for the Far Eastern Economic Review, claimed a body had been removed from a local morgue days before de Guzman’s death, leading to suspicion that the man at the centre of the fraud had faked his death, and fled the country.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.


Glencore’s Project Caesar

Earlier this year, Guardian writer Christopher Knaus exposed a campaign by mining giant Glencore to discredit renewable energy and promote the use of coal across a number of social media outlets that claimed to be grassroots organisations.

The schemed, known internally as ‘Project Caesar’, saw Glencore commit up to £7m a year from February 2017 to early 2019 to the C|T Group, an Australian campaigning company that has previously worked with the Conservative Party in the UK, and the Liberal Party in Australia. The project is believed to have funded groups such as Energy in Australia, a Facebook page with more than 20,000 followers,, which frequently posts anti-renewable energy material.

The project also involved the gathering of information on a number of pro-renewable groups, including Greenpeace, to understand their size and resources.

Glencore has admitted to working with the C|T Group to conduct polls to gauge public opinion on coal, as well as what it calls a “proactive communications campaign” to promote coal interests.

While Glencore has not been accused of breaking any laws, the incident has been labelled a “national disgrace” by former Australian Prime Minister Kevin Rudd, and has raised questions about the transparency and credibility of Glencore’s actions. Campaigners have called for the publication of federal ministers’ diaries, and an update to Australia’s Register of Lobbyists, to ensure the public is better-informed about the behaviour of politicians and companies.


Rio Tinto’s Benga coal mine

In 2011, Rio Tinto purchased Australian miner Riversdale Mining in a $3.7bn deal that saw Rio Tinto take ownership of the Benga coal mine in northwest Mozambique, which Riversdale had begun to build in 2010 at a cost of $800m. In 2012, the company raised $5.5bn from investors for the project, with 95% of the money believed to be funnelled back to British investors, and the project quickly collapsed.

First, the Mozambique Government said Rio Tinto would not be permitted to use the Zambezi River to transport coal to the Indian Ocean for export, forcing the company to rely on underdeveloped railways, which could not carry the amount of coal Rio Tinto expected to mine. Then in 2013, coal prices dropped to below $100 per tonne from a peak of $130 per tonne in 2011, severely undermining the project’s financial potential.

Managers at the Benga mine said that the project was worth negative $680m, and Rio Tinto wrote off $3.5bn on the operation. The company eventually sold the mine in 2014 for just $50m.

In 2017, the US Securities and Exchange Commission (SEC) charged former CEO Tom Albanese, who resigned from Rio Tinto in 2013 at the request of the board, and CFO Guy Elliott, with fraud over their involvement in the scandal. The SEC claims that the pair knew about the mine’s financial troubles, including the negative valuation of the project, yet continued to insist the mine would be profitable in order to generate interest from potential backers.


BSGR’s bribery in Guinea

In February 2019, Israeli mining company BSGR and founder Beny Steinmetz ended a five-year dispute with Guinea, with the investor agreeing to abandon the Simandou iron project in the country following allegations of corruption in the initial award of mining licences.

BSGR was first given permission to mine iron in 2012, following exploration works costing just $165m. However, a committee set up by the Guinean Government found that the company, through intermediaries, paid around £8m to Mamadie Touré, the wife of former Guinean dictator Lansana Conté, who ruled the country until his death in 2008. The committee, established under Guinea’s first-ever democratically elected government, was eager to eliminate corruption originating from the previous regime.

Steinmetz was arrested in 2017 by police from Israel, Switzerland and the US over the accusations, and his company entered voluntary administration last year to avoid legal challenges in relation to the project.

The operation was also hampered by the need for significant infrastructure developments in the region, including the building of a 650km railway linking the mine to Guinean capital Conakry, and the construction of a deep water port. The developments were valued at $20bn, and while the World Bank supported the project in 2014, it has since withdrawn its backing following BSGR’s legal troubles.

While BSGR hopes to become involved in Guinea once again, through the Zogota iron ore deposit which has a potential annual production of two million tonnes of iron, Niron Metals has stepped into the vacuum and signed an agreement with the Guinean Government to develop the project.