COUNTRY IN FOCUS
deep-sea port located just south of Conakry on the Morebaya
River, with total investment estimated at USD20-billion. If the
Simandou project takes off , it would be capable of producing
100 million tons per annum, which would see it surpass Vale as
the largest iron ore producer.
The other high-grade iron deposit is Nimba, that BHP is
trying to sell as it does not fi t in the current portfolio criteria.
Guinea is one of the top bauxite producing countries in
the world, with seven new projects, a close second after
Australia’s 12 new projects. According to Fitch, Guinea’s
bauxite production is set to increase from the reported 59
million tons in 2018 to 82.3 million tons by 2028, supported
by the demand from China. In 2017 France's Alliance Minière
Responsable (AMR) signed a deal with Société Minière de
Boke (SMB) to exploit bauxite in the Boke region. The deposit
THE CURSE OF SIMANDOU
By Leon Louw
In 2014, this decade-long saga was placed on the agenda of the
International Centre for the Settlement of Investment Disputes,
an international tribunal based in Paris, France. At the end of a
two-week-long hearing, during which infamous Israeli business
billionaire Beny Steinmetz attempted to clear his name, Guinea
lawyers said Simandou is, “An exceptional case of exceptional
importance with evidence of corruption which is equally
exceptional.”
Steinmetz was detained for four days in Israel in 2017 and
placed under house arrest while police investigated allegations
of fraud, forgery, and money laundering. According to reports,
Steinmetz had arranged for bribes to be paid to the government
of Guinea to secure the mining rights of his company, Beny
Steinmetz Group Resources (BSGR), at Simandou. Steinmetz has
made millions from questionable mining deals in Africa, mostly
in the diamond fi elds of West Africa.
Rio Tinto fi rst acquired the exploration rights at Simandou in
1997, with the intention of developing what is probably the
richest iron ore deposit on the continent. After a decade of
dragging its feet, the then president of Guinea, Lansana Conté,
became impatient and stripped the Anglo-Australian miner
of half its rights in July 2008. Enter Steinmetz and BSGR, who
six months later, shortly before Conté’s untimely death, gets
awarded mining rights to blocks one and two of Simandou.
Then, in 2010, with the iron ore price hovering close to its
highest levels ever, Brazilian mining giant Vale acquires a chunk
of Simandou by making an upfront payment of USD500-million
to BSGR, in what becomes known as the ‘deal of the century’.
When Alpha Condé (not related to Lansana) took over as the
president of Guinea in 2010, he demanded that the holders
of Simandou’s mining rights pay the new government for the
claims he says were illegally awarded by his predecessors. In
2011, Rio Tinto settles the matter by paying USD711-million
for blocks three and four, but Steinmetz refuses to fork out a
whopping USD1.25-billion for blocks one and two and calls it
extortion. This, of course, puts him on a collision course with
Condé, who eventually, in 2014, evicts BSGR from Guinea.
In the meantime, Vale pulls out of Guinea in 2012, blaming
a slump in the iron ore price. Since then, numerous court
cases involving Rio Tinto, Vale, Steinmetz, and the Guinean
government have further blighted a project that was once
hailed as the ‘saviour of Guinea’.
34
African Mining November 2019
Simandou’s history reads like the script of a Hollywood movie.
Corruption, deceit, intimidation, threats, insults, and accusations
involving some of the most controversial business characters
and political heavyweights around, have dominated the
discourse about what should be the most prolifi c iron ore mine
in the world.
Controversial Israeli businessman Beny Steinmetz, is embroiled in the
ongoing Simandou saga.
Besides Steinmetz, who is still being investigated, several
others involved at Simandou have been convicted of
corruption and other related charges. Frederic Cilins, a BSGR
associate, served two years in prison in the US for obstructing
an FBI investigation, while Mahmoud Thiam, Guinea’s former
minister of mines, who backed BSGR’s deal with Vale, was
found guilty of laundering USD8.5-million in bribes he
allegedly took in exchange for helping a Chinese company
secure mining rights. Asher Avidan, the former head of BSGR
in Guinea, is restricted, like Steinmetz, in his travels, while
the Israeli police and prosecutors in the US and Switzerland
continue to circle.
In October 2016, Rio Tinto agreed to sell its remaining
stake in the Simandou projects to Chinalco. However, in
November 2016, a few weeks after the signing, two former
employees were found to have paid USD14.8-million to French
banker François Polge de Combret – who shares a personal
relationship with Guinea’s president Alpha Condé – for
consultancy services related to the project.
In addition, Rio Tinto’s former energy and minerals chief
executive Alan Davis was suspended, and regulatory aff airs
group executive Debra Valentine stepped down after Rio
conducted an internal investigation that discovered emails
from 2011 containing information related to the consultant.
According to the statement, the agreement between Rio Tinto
and Chinalco was worth about USD1.3-billion at the time. The
deal would have seen Chinalco become the majority owner
of Simandou, increasing its stake from 39.95% to 85%. The
Government of Guinea holds a 15% stake in the project.
Almost 20 years after Simandou was fi rst discovered, the curse
that has plagued it from the very beginning, is still hampering
its progress. Simandou was always going to be diffi cult to
develop, considering its remote location, but it remains
one of the greatest iron ore deposits in the world. Yet, its
development seems as far off as what it was 20 years ago.
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