African Mining November 2019 | Page 36

 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. www. africanmining.co.za