By Alexis Flynn
LONDON--A Guinean government committee set up to probe the
country's mining deals has recommended that BSG Resources Ltd. and
Vale SA be stripped of their rights to the Simandou iron-ore
project, potentially putting one of the world's most sought-after
mineral deposits back into play.
In a final report filed after a three-year investigation, the
committee--made up of Guinean government bureaucrats--wrote that
they found there was "precise and coherent evidence" that
Africa-focused BSG Resources had obtained the rights to
Simandou--in which it subsequently sold a share to Brazilian giant
Vale--through corruption, according to a copy of the report
reviewed by The Wall Street Journal. The committee, in its report,
alleges that BSG Resources had used local intermediaries to bribe
one of former President Lansana Conte's wives in a bid to secure
mineral rights in the West African nation.
BSG Resources disputed the committee's findings and said it
would pursue international arbitration to protect its interests. It
also accused President Alpha Conde, who set up the committee to
probe mining deals shortly after coming to power, of seeking to
expropriate the stake by stealth.
"BSGR will prove these allegations are false. The Guinean
government is relying on fabricated claims, compromised witnesses
and illegitimate processes," said a BSG Resources spokesman.
"The next step is international arbitration where the evidence
can be aired in a proper forum and BSGR can establish the
truth."
The committee wrote in its report that Vale has denied any
wrongdoing to investigators, and the company said any alleged
impropriety would have preceded its involvement in the project.
Vale agreed to pay BSG Resources $2.5 billion for a 51% stake in
the project in 2010.
The committee recommended that BSG Resources, the mining arm of
Israeli tycoon Beny Steinmetz's family conglomerate, be barred from
participating in any re-tendering of the licenses. However, it
didn't recommend that Vale be similarly barred.
Write to Alexis Flynn at alexis.flynn@wsj.com
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