Global
The curse of Simandou
Corruption has sterilised one of the greatest iron ore deposits on
earth, writes Leon Louw.
O
Simandou’s tainted history
Rio Tinto first acquired the exploration
rights at Simandou in 1997, with the
[8] MINING MIRROR JANUARY 2019
The hills of Simandou in Guinea, which became a huge point of dispute
between several stakeholders.
intention of developing what is probably
the richest iron ore deposit on the
continent. Though, after a decade of
dragging its feet, the then president of
Guinea, Lansana Conté, lost his patience
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, received 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 acquired
a chunk of Simandou by making an
upfront payment of USD500-million to
BSGR, in what became 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
ne of the most tainted projects
in African mining history
has made the headlines again
after Rio Tinto and Chinese company
Chinalco failed to pull off a sales
agreement signed in October 2016.
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 on what should
be the most prolific iron ore mine in the
world. The announcement by Rio Tinto
is the latest in a long list of statements by
several entities, media houses, individuals,
governments, and companies; and yet,
it appears that there is still no clarity on
who should legally own what.
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 last year 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 his company’s — Beny Steinmetz
Group Resources (BSGR) — mining
rights at Simandou. Steinmetz has made
millions from questionable mining deals
in Africa, mostly in the diamond fields
of West Africa.
pay the new government for the claims
he said were illegally awarded by his
predecessors. In 2011, Rio Tinto settled
the matter by paying USD711-million
for blocks three and four, but Steinmetz
refused to fork out a whopping
USD1.25-billion for blocks one and two
and called it extortion. This, of course,
put him on a collision course with
Condé, who eventually, in 2014, evicted
BSGR from Guinea.
In the meantime, Vale pulled 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 Guinea government
have further blighted a project which was
once hailed as the saviour of Guinea.
Victims of corruption
Besides Steinmetz, who is still being
investigated, several other people
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