MINE: Vale may settle Simandou lawsuit Frik Els | December 5, 2014 Guinea is home to some of the richest and easily exploitable iron ore fields outside of Australias Pilbara region and top producer Vales Brazilian home base. In May, the Guinea government and Rio Tinto (LON:RIO) and its partners – Chinas Chalco together with the World Bank – inked a game-changing $20 billion deal for the southern section of the Simandou iron deposit. At full production Rios Simandou concession would export up to 95 million tonnes per year – thats a third of Rios total capacity at the moment – and would catapult Rio past Vale as world number one. Rio Tinto held the licence for the entire deposit, but was stripped of the northern blocks in 2008 by a former dictator of the country, one of the poorest in Africa. BSG Resources, a company associated with Israeli diamond billionaire Beny Steinmetz acquired the concession later that year after spending $160 million exploring the property. In 2010 BSGR sold 51% to Vale (NYSE:VALE) for $2.5 billion, but the Rio de Janeiro-based company stopped paying after the first $500 million when the investigation was launched. The Guinea government withdrew the mining permit in April, accusing BSGR of obtaining its rights through corruption. Rio Tinto subsequently filed a lawsuit for billions of dollars against both Vale and BSGR for what it called a steal of its previously-owned concession. Rio alleges BSGR paid a $200 million bribe to Guineas former minister using funds from Vales initial payment. The Wall Street Journal reports that Vale may consider settling the suit out of court. Clovis Torres, Vale’s general counsel, said Friday his company might be willing to settle the lawsuit, but “never as an acceptance of guilt.” “What may be even more absurd than this lawsuit is the high cost of legal processes in the U.S.,” Mr. Torres said in an event broadcast from London. “So to avoid the additional absurdity of incurring even more costs, we could without a doubt think of something along those lines.” Representatives for Mr. Steinmetz didnt immediately respond to a request for comment. A potential settlement isn’t “on the table” yet, since Vale is currently awaiting a U.S. judge’s decision on where the case should be tried. Rio Tinto filed the lawsuit in New York, while Vale argues the dispute should go to arbitration in London. “They need to rule on that point before continuing ahead to the discovery process,” Mr. Torres said.
Posted on: Sat, 06 Dec 2014 04:03:42 +0000
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