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Beny Steinmetz’s BSG Resources May Lose Guinea Iron Ore Concession : Enquiry Report Published


The West African nation of Guinea today published the findings of a study it had undertaken into the propriety of the award by the Government of Guinea six years ago of exceptionally valuable iron ore mining concession in the remote Simandou region of the country to BSG Resources after being taken away from another mining company Rio Tinto.

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Its basic conclusion is that the wife of the late dictator of that country, and a former intermediary who at one time represented BSGR, were involved in a bribery scheme that eventually led to the award of the Simandou mining rights to BSG Resources.

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BSG Resources, or Beny Steinmetz Group Resources, which is a Guernsey registered corporate entity, is the African mining arm of Benny Stenimetz’s business empire. It is directly controlled by a trust of which he is a beneficiary, but in formal terms he has no position in it and no authority over it.

At the time of the award of the Simandou concession this was considered a major step forward for BSG Resources and, indeed at the time, maybe for Guinea even itself as it was expected to accelerate the development of the whole up-country region with railways, mines and infrastructure.

However the award of these particular mining rights occurred in late 2008, not long before the then President of the country Lansana Conté – a notorious dictator – was overthrown, after 24 years in charge. Once the country became under the management of its eventual new President, President Alpha Condé, who was then duly elected by democratic vote in 2010, it should have been clear that change was likely somewhere on the horizon.

Even two years into the new regime all seemed well however, and, after spending US$160 million on preliminary development of the new deposit, thought to be one of the richest in Africa, in 2010 BSGR was able to sell a 50% interest in the new mine to Brazilian mining giant Vale – for US$2.5 billion. US$500 million of this was supposed to be paid up front and the rest over time as the mine became developed.

Simandou iron ore project in Guinea /Source The-Australian

Clearly this was too much money not to be noticed, and BSG Resources soon afterwards fell under the scrutiny of the new Guinea government, prompted and supported by a basically anti-mining NGO, Global Witness, which is funded by, amongst others, George Soros.

Soon a full scale corruption inquiry ensued with allegations scattered around thick and fast; including against the fourth wife of the defunct dictator, Mamadie Touré, and against the former middle man Frederic Cilins who ended up being arrested in the United States over allegedly potentially incriminating documents.

The upshot is that today as a result of the outcome of the enquiry, the Guinea government may likely now immediately strip the BSG Resources/Vale joint venture of its mining concession in Simandou. The Guinea government was careful to say, however, that Vale itself would be welcome to bid for them again as it was not found to have been corruptly involved in the original concession award. Rio Tinto has also signaled it might bid for the rights a second time when tenders are called again.

The Guinea bribery allegations have even led to enquiries in Switzerland where Benny Steinmetz resides, though no direct allegations seem to have been made anywhere against Mr Steinmetz himself.

BSG Resources itself has quickly, and bluntly, responded to the publication of the enquiry’s findings, as follows:

“BSGR will prove these allegations are false. The Guinean government is relying on fabricated claims, compromised witnesses and illegitimate processes to justify President Alpha Conde’s carefully orchestrated plan to reward political allies who allegedly helped rig his election by providing them with BSGR’s legally-acquired mining rights. BSGR demands the opportunity to defend itself in a forum that plays by the rules and follows internationally recognized conventions, such as allowing cross-examination of witnesses.”

“BSGR has a track record of performance spanning more than three decades and has never before been accused of any wrongdoing nor been embroiled in any controversy. Despite overwhelming evidence of government corruption, embezzlement and harassment — not to mention lack of transparency, democracy and human rights abuses — President Conde has manipulated the process through unconditional technical and financial support from activists like George Soros and the NGOs that function as his personal advocacy groups. BSGR calls on these groups to demonstrate their independence by supporting an investigation into the long-time and unresolved allegations of government corruption in Guinea.”

“BSGR has sought to cooperate with the committee despite the fundamental unfairness, procedural irregularities and false claims inherent in its review process. The next step is international arbitration where the evidence can be aired in a proper forum and BSGR can establish the truth.”



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