Guinea wants Steinmetz iron deal despite corruption probe - report

Guinea seeks a deal on the rights to one of the worlds richest undeveloped iron ore deposits held by Beny Steinmetz Group Resources and Brazil's Vale, the "Financial Times" reports.

Guinea seeks a deal on the rights to one of the worlds richest undeveloped iron ore deposits held by Beny Steinmetz Group Resources (BSGR) and Brazil's Vale, the "Financial Times" reports. Guinea is happy to conclude a new deal even though it is pursuing a corruption investigation into the Israeli company.

The "Financial Times" claims that officials in the resource-rich west African country "have signaled their readiness to strike a deal despite a stand-off over the groups claim to the Simandou prospect, where Vale halted development in October."

Mohamed Lamine Fofana, mining minister in Guineas elected government, told the "Financial Times" that a new deal would need to be updated to reflect the current law and the current realities but that the government was seeking strategic partnerships.

The UK paper added, "The mining groups existing agreement was struck under the dictatorships that preceded the presidency of Alpha Condé, who said last week that the government was working with Vale to ensure its continued engagement in the Simandou project."

"The role under any new deal of BSGR, the resources arm of the conglomerate managed on behalf of Beny Steinmetz, the Israeli diamond tycoon, is unclear. BSGR said that any new strategic partnership could only be made with its blessing and that of Vale, which had no comment."

The FT recounted that in November a committee probing past mining contracts warned BSGR that it might cancel BSGR's rights if it concluded that it had paid bribes to previous governments to win rights to Simandou.

BSGR told the FT it had made a detailed submission to the committee in response to the allegations, setting out its indisputable rights to Simandou and another smaller Guinean iron project. The company added that "the committee had not provided any evidence to support its false and malicious allegations.

Among the allegations it is claimed that a representative of BSGR offered former president Lansana Conté a gold watch adorned with diamonds and that the company agreed to pay his fourth wife a commission of $2.5m for helping the group secure mining rights in Guinea.

Nava Touré, the chair of the mining committee, said, We require the full co-operation of mining companies to allow the process to move forward. But he gave no indication of whether BSGRs submission had satisfied the committees demands that the company disprove the corruption allegations."

Vale bought into BSGR's Guinean holding in 2010 for $2.5bn after BSGR bought the rights in 2008 and invested $160m on preliminary work at its Guinean prospects before the Vale deal.

BSGR said that together with Vale it is "committed to Guinea and the partners have invested over $600m to develop Simandou. Vale declined to comment on its talks with Guinea on the future of its Simandou rights and added that it would not be resorting to international arbitration, contrary to BSGRs threat last week to do so.

The "Financial Times" observed that "any new 'strategic partnership' might resemble the one signed last year between the government and Rio Tinto, designed to end a long-running dispute that led to the Anglo-Australian company losing rights to the half of Simandou that was subsequently won by BSGR. Rio made a one-off $700m payment to the state and pledged to start shipping ore from the half of Simandou it still controls by 2015."

Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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