Rio Tinto files lawsuit against Vale and BSGR for stealing mining rights in Guinea

1 May 2014 (Last Updated May 1st, 2014 18:30)

Rio Tinto has filed a lawsuit against Vale and Israeli billionaire Beny Steinmetz and his company BSG Resources (BSGR), for allegedly conspiring to steal the rights of Simandou blocks one and two iron ore mine in Guinea.

Rio Tinto has filed a lawsuit against Vale and Israeli billionaire Beny Steinmetz and his company BSG Resources (BSGR), for allegedly conspiring to steal the rights of Simandou blocks one and two iron ore mine in Guinea.

Rio and Vale entered into an agreement in 2008, where Rio claims to have provided Vale with information about Simandou.

Rio has accused Vale of passing on its confidential information about Vale buying a stake in the Guinea property to BSGR, by bribing officials in Guinea.

According to Rio, Vale and BSGR paid a $200m bribe to former Guinean minister of mines Mahmoud Thiam for his help in securing the Simandou rights.

"Unfortunately, it's Guinea's economy that will continue to suffer."

Thiam was quoted by Bloomberg citing an email statement saying that Rio's claims were false and posed as facts events that never took place, and that the company may be attempting to divert attention from its unwillingness to develop the property.

"Unfortunately, it's Guinea's economy that will continue to suffer at the hand of corporate bandits," Thiam stated.

Rio claimed that, when Vale learned that BSGR was attempting to interfere with and steal Rio Tinto's rights to the Simandou concession, Vale saw a golden opportunity to obtain control and to do so cheaply.

Following the complaint, the Guinean Government cancelled BSGR's and Vale's mining licences at the Simandou and Zogota deposits.

According to Rio, gaining control of the Simandou deposit would increase Vale's position in the iron ore market, as the only other source of iron ore is Vale's Carajas mine in Brazil.

However, Vale said that the government's decision is based on fraudulent conduct in connection with the acquisition of the mining licenses and refers to a report by the Technical Committee for the Review of Mining Titles and Agreements.

Vale alleged that the mining concessions had been tainted by corrupt practices on the part of BSGR.

BSGR, however, has denied conducting any wrong practices and stated that it will seek international arbitration against Guinea's Government.

BSGR spokesman was quoted by The Australian as saying that 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," a spokesman added.

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