Beny Steinmetz Sees Guinea Mining Project Slipping Even Further Away

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In a what may described as something of a preemptive strike, the CEO of mining giant Rio Tinto has launched a bazooka attack aimed directly at Beny Steinmetz’s BSG Resources and its erstwhile Brazilian joint venture partner Vale, over the disputed Simandou project in Guinea.

On Friday Rio Tinto said it is set to soon finalise a US$20 billion arrangements to develop the Simandou iron ore deposit in Guinea later this month.

Recently BSG Resources launched an arbitration proceeding against the government of Guinea for recently stripping it of its mining concession for the northern half of the project. Not to be out-done its former partner Vale has launched arbitration proceeding of its own against BSG Resources. Finally, as well, Rio Tinto has launched legal proceedings against both of them in, of all places, New York which is about as far away from Guinea as you can get.

Rio Tinto’s new CEO Sam Walsh gave a speech at the World Bank on Friday during a major conference taking place there last week on the subject of infrastructure development. Rio Tinto has also taken the trouble to post both the webcast, and an official transcript, of his remarks on the Rio Tinto web site.

Read More:

• Beny Steinmetz’ BSG Resources Starts Arbitration Process Against Guinea Government In Mining Dispute
• Government Of Guinea Officially Revokes Beny Steinmetz’s Iron Ore Concession
• Beny Steinmetz’s BSG Resources May Lose Guinea Iron Ore Concession : Enquiry Report Published
• Alleged Corruption Issue In Guinea Mining Deal Heats Up – Man Arrested In Florida

Of course, the World Bank plays a major role in infrastructure development in many parts of the world on a grant basis. The World Bank’s private sector investment arm the International Finance Corporation, or IFC also partners with private sector companies in certain major projects as well, on an equity basis.

During his speech the Rio Tinto CEO confirmed that Rio Tinto, a Chinese joint venture partner partner the metals company Chalco, and the IFC are partnering with the Government of Guinea in developing the Simandou project.

He also said that the three entities were working together to build the Simandou mine, and to establish a consortium to finance, build, and operate the infrastructure along what we are calling the “Guinea Growth Corridor.”

He then hammered home to the conference his theme that the key ingredient to such successful partnerships is “trust and mutual benefit” – obviously referring to some of the troubles the project has gone through in recent years where this was in short supply on many fronts.

Walsh said the Government of Guinea had now recognised that investors like Rio Tinto need regulatory and legal certainty in order to risk shareholders’ money, and that it had implemented a number of legal changes that have substantially improved Guinea’s investment climate.

Walsh pointed out to the conference that Guinea’s President Condé has committed the country to transparency, adopting the EITI standards, known as the Extractive Industries Transparency Initiative, and to publishing all mineral agreements on the Internet for public review.

Finally Sam Walsh said that “Later this month, we expect to sign the Investment Framework that formalises our partnership with the Government of Guinea, Chalco and the IFC.”

While he didn’t come out and directly say therefore that Rio Tinto was now all set to proceed with the development of all of the Simandou concession, not just its previously held southern half, such an implication may indeed now be on the table and may already have gone pretty far down the road.

If that is so, that would certainly now be a pretty major bazooka shot fired at Beny Steinmetz’s BSG Resources, and former partner Vale.