Rio Tinto Executive Suspended Amid Payments Probe
November 08 2016 - 09:00PM
Dow Jones News
SYDNEY—One Rio Tinto PLC executive stepped down while another
was suspended as the miner alerted authorities to emails that
reference US$10.5 million worth of payments made to a consultant on
the troubled Simandou project in Guinea, one of the world's largest
iron-ore deposits.
The Anglo-Australian mining company has since August been
investigating the emails relating to Simandou, a project that has
been bogged down by lawsuits and in which Rio Tinto last month sold
its stake to Aluminum Corp. of China Ltd. for up to US$1.3 billion.
It said on Wednesday it was notifying authorities in the U.K., U.S.
and Australia.
Energy and Minerals Chief Executive Alan Davies, who was
responsible for the Simandou project at that time, has been
suspended.
Legal and Regulatory Affairs Group Executive Debra Valentine has
stepped down. She had previously told the company she intended to
leave Rio Tinto in May, 2017, the company said.
"On Aug. 29, Rio Tinto became aware of email correspondence from
2011 relating to contractual payments totaling US$10.5 million made
to a consultant providing advisory services on the Simandou project
in Guinea," the company said in a regulatory filing.
The miner became aware of the communications after an
unspecified number of emails were published to an open internet
forum, a spokesman said. The emails were posted for a short time
before being removed, he said.
The Simandou site, which Rio Tinto began exploring in 1997, had
been considered one of the mining world's most coveted prizes due
to its size and high quality of iron ore. Rio Tinto said it could
sustain a mine for more than four decades and possibly turn Guinea
into one of the world's top exporters of the steelmaking
commodity.
The US$20-billion project became engulfed in controversy,
however, after the government of now-deceased dictator Lansana
Conté in 2008 stripped Rio Tinto of two of the project's four
blocks on grounds that the miner had failed to develop the project
in a timely manner. The government awarded the rights to BSG
Resources Ltd., the mining business of Israeli billionaire Beny
Steinmetz, which later struck a deal with Brazil's Vale SA to buy a
51% stake in the Simandou assets.
The Guinea government later stripped BSGR and Vale of those
rights, alleging they were illegally obtained.
"Rio Tinto intends to cooperate fully with any subsequent
inquiries from all of the relevant authorities," the company
said.
It is notifying the U.S. Department of Justice, the U.S.
Securities and Exchange Commission, the U.K.'s Serious Fraud Office
and the Australian Securities and Investments Commission.
The miner said it wouldn't comment further. Efforts to reach Mr.
Davies and Ms. Valentine weren't successful.
"Given the scale of Rio Tinto, it would appear unlikely that
this development would have a material impact from a monetary
perspective, though we will have to see if anything eventuates from
this in the future," said RBC Capital Markets analyst Paul Hissey.
"Rather, this is a potentially negative public relations issue
which Rio Tinto has managed to avoid whilst BHP Billiton Ltd. has
been dealing with the Samarco dam incident."
Rio Tinto shares didn't react. Its stock traded up 1% in Sydney
on Wednesday, versus a 0.8% rise in the S&P/ASX 200.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
November 08, 2016 20:45 ET (01:45 GMT)
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