Beny Steinmetz Company Rejects Guinea Claims of License Abuse
February 10, 2012, 12:11 AM ESTBy Franz Wild
Feb. 9 (Bloomberg) -- BSG Resources Ltd., the company planning to develop an iron-ore deposit in Guinea with Vale SA, rejected claims by the nation’s mines minister that it had not followed the law in managing its license.
“We totally reject the incomprehensible comments” by the Guinean minister of mines, BSG spokesman Ben Brewerton said today in an e-mailed response to questions. “Any attempt to illegally undermine our position will be firmly resisted. The minister’s comments will further undermine the confidence of potential investors in Guinea.”
A commission in the West African nation will review BSG’s license and will decide on possible sanctions, Mines Minister Mohamed Lamine Fofana said in an interview at the Investing in African Mining Indaba conference in Cape Town on Feb. 7. The commission may decide to cancel the license, he said. A way for Vale to keep its stake may be found, since it’s only BSG that is the subject of the review, he said. BSG is controlled by Israeli businessman Beny Steinmetz.
BSG “didn’t follow the law,” Fofana said. “Their treatment will depend on the results of the review. If the results show that the infringement merits cancellation, that will happen, if not, it won’t.”
Rio de Janeiro-based Vale bought the Simandou North Blocks 1 and 2, previously owned by Rio Tinto Plc, and the Zogota project in Simandou South for $2.5 billion in April 2010. The government in 2008 ordered Rio Tinto to hand Simandou North over to BSG
‘Considerable Sums’
Guinea’s civilian administration, which replaced a military junta after elections in November 2010, has revised its mining code and is reassessing contracts to ensure it draws more benefit from its mineral assets.
The contract reviews will initially be conducted by “high ranking local staff” supported by international lawyers to protect Guinea from claims that it is conducting an asset grab, before being finalized by the ministerial commission, Fofana said.
Vale and BSG’s joint-venture “has invested considerable sums in its projects in Guinea, creating 3,000 jobs and will be the first company to produce iron ore in Guinea’s history,” Brewerton said. It “has and is co-operating fully with the relevant Guinean authorities on all aspects of its activities.”
Bouna Sylla, Fofana’s economic counselor, didn’t immediately answer two calls to his mobile phone, which did not allow voice messages to be left. London-based Africa Practice Ltd., which does communications work for the ministry, didn’t immediately respond to a phone call to its office and an e-mail requesting comment.
--Editors: Ben Holland, Karl Maier.
To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net
To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net
