Police detain central figure in mining’s largest corruption scandal

The UK’s Telegraph newspaper reports that Steinmetz could be held until Thursday. Steinmetz who denies any wrongdoing and was not charged with a crime again blamed hedge fund billionaire George Soros for running a defamation campaign:

“I feel terrible that the state of Israel is doing this to me. This is customary in totalitarian states. It’s like a dictatorship that decides and marks people,” Mr Steinmetz said.

“There is nothing, the whole investigation is nothing. There are those who have marked us here. It’s political. George Soros marked me. We did not do anything.”

BSGR acquired the rights to one half of Simandou (stripped from Anglo-Australian giant Rio Tinto over development delays) in 2008 when Guinea was under military rule.

After spending $170 million advancing the project BSGR signed a $2.5 billion deal with Brazil’s Vale in 2010 to jointly develop the project, but the Rio de Janeiro company only paid out $500 million before Guinea stripped BSGR’s rights in 2014.

The UK’s anti-fraud investigating body said last month it is probing Rio’s dealings in Guinea involving Simandou. In November last year Melbourne-based Rio fired two executives involved in the project after an internal investigation uncovered a $10.5m payment in 2011 to a French national acting as a go-between with the West African nation’s government.

Rio, the world’s second largest mining company, announced in October it was exiting the project by selling its stake to former partner Chinalco for up to $1.3 billion. Rio has spent more than $3 billion advancing the project (including a $700m payment to the Guinea government to resolve “outstanding issues” in April 2011) having first acquired the property in the late nineties.

Rio last year had its lawsuit for damages against BSGR and Vale dismissed in a New York court. BSGR is still seeking international arbitration over the loss of its Simandou mining rights.

In June, ex-Wall Street banker Mahmoud Thiam who served as Guinea’s mining minister during 2009–2010 was convicted of laundering $8.5 million he was alleged to have taken to help a Chinese company gain mining concessions. Guinea is one of the world’s largest producers of bauxite, the primary ore used in the production of aluminum.

With complete control of Simandou, Beijing-based Chinalco may revive the stalled project for the southern block of the 2 billion-tonne deposit of high-grade iron ore, but the cloudy outlook for prices for the steelmaking raw material now trading around $70 a tonne after peaking in 2011 at $190 may deny Guineans a windfall again.

The original $20 billion agreement signed in 2014 with the backing of the World Bank (which has since withdrawn support) called for a new 650km railway to Conakry, Guinea’s capital in the north, plus a new deep water port at a conservatively estimated cost of $7 billion, and infrastructure investments that would double the economy of the impoverished country.

NOW READ: The Iron Ore Wars 2002 – 2007