BSGR, defendant in Rio Tinto Simandou corruption claims, sues Guinea

BSGR Resources, which has been accused of bribery and corruption by Rio Tinto over the Simandou deposit, is suing Guinea and its president and has made threats towards Rio Tinto as well.

It comes after the company’s concessions to Block 1 and 2 of the Simandou deposit were revoked by the Guinean Government.

Earlier this month Rio Tinto filed a legal complaint against BSGR and Vale over the loss of Block 1 and 2 of its Simandou mining concessions in Guinea.

In its filed complaint, Rio stated that negotiations between it and Vale started in 2008, and Rio provided the information regarding Simandou. It stated that “as Vale quickly surmised, gaining control of the Simandou deposit would strengthen Vale's position in the world's high-grade iron ore market, since the only other comparable source is Vale's own Carajas Iron Ore Mine in Brazil”.

“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,” Rio said.

The miner went on to state that Vale and Steinmetz “entered into a conspiracy to misappropriate Rio Tinto’s Simandou rights” and used a campaign of bribery to do so.

It stated that Vale and Steinmetz’s BSGR then paid a $200 million bribe to the Guinean minister of mines, Mahmoud Thiam, for his assistance in “unlawfully securing Rio Tinto’s Simandou rights.

Responding to Rio Tinto's legal action, BSGR stated "this is the latest absurdity in the charade created by Guinean president Alpha Conde's illegal crusade to reward political allies who helped rig his election. 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".

Speaking today at its AGM, Rio Tinto chairman Jan du Plessis stated that Rio will fight BSGR for the rights to the site.

Following the revelation of this information, the Guinean Government revoked all of BSGR and Vale’s mining licences for both the Simandou and Zogota concessions in the country.

“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 (the "Technical Committee") concluding that the mining concessions had been tainted by corrupt practices on the part of BSGR,” Vale said in a company statement.

Vale went on to say that “the Technical Committee did not find any involvement by Vale in the fraudulent conduct relating to the acquisition of the mining licenses, which occurred more than one year before Vale made any investment in VBG, and recommended that the Guinean Government adopt measures to exclude VBG and BSGR, and BSGR’s affiliates, from the reallocation of the mining titles, but did not suggest that Vale be prohibited from participating in any such process.”

In the wake of this rescinding of licences, BSGR has begun arbitration with the International Centre for Settlement of Investment Disputes against the Government of Guina and its president, Alpha Conde.

BSGR stated that it “is seeking the restitution of its mining titles and agreements as well as damages arising out of the revocation of these interests, which have been unlawfully expropriated through the illegal and dishonest practices of the corrupt Alpha Conde government in Guinea”.

It also went on to further threaten Rio Tinto and Vale, stating: “Anyone, whether it be the Guinean government, Vale, Rio Tinto or anyone else who has negotiated an interest in Simandou or does so in the future will be dealing unlawfully in BSGR's property. In such circumstances BSGR will take immediate steps to sue those parties who wrongfully interfere in its lawful interests.”

The miner then went on to accuse Rio Tinto, the Guinean Government, and Vale of theft.

“BSGR will not sit idly while President Conde and his allies attempt to steal BSGR’s assets. It is time for a proper adjudication of these matters in a court of competent jurisdiction rather than through the sham processes imposed by President Conde.”

The case continues.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.