Anglo’s sale of De Beers hindered by diamond market state
Anglo American has warned of more production cuts at De Beers due to reduced spending by Chinese consumers prolonging the market downturn.
The Simandou mountains in Guinea groan under some of the richest iron ore anywhere on the planet and winning the licence to mine the steelmaking raw material brings with it billions of dollars for decades to come.
Rio Tinto is developing the southern part of the vast mountain deposit with first production from the massive $20 billion project not expected until late 2018.
The northern part of the Simandou concession is held by BSG Resources, a company in the stable of billionaire diamond magnate Beny Steinmetz, and Brazilian giant Vale.
All work on the BSGR-Vale section has been halted amid an anti-corruption probe.
Bloomberg reports Thursday the Geneva home of Steinmetz was raided by Swiss police under orders from the city’s public prosecutor following a request by the government of Guinea.
The raid where reportedly nothing was taken happened within the last fortnight and Steinmetz, who according to some estimates is worth as much as $8 billion making him Israel’s richest person, is co-operating fully says his lawyer Marc Bonnant:
Steinmetz is undeterred, according to Bonnant, who described the actions of Guinea as a “campaign of intimidation and malicious lies, which are an attempt to damage his impeccable reputation” […]
“BSGR is seemingly being punished for refusing to engage in bribery or corruption and for focusing singularly on trying to bring development to the country.”
BSGR was awarded the rights days before the death of Guinea dictator Lansana Conté in 2008 after spending more than $160 million exploring the prospect.
Conté had not long before stripped the Simandou blocks from Rio Tinto which had held the exploration rights since the late 1990, ostensibly over its failure to develop the deposits.
In 2010 BSGR sold a controlling half of its concession to Vale for $2.5 billion.
But after forking over the first half a billion dollars, the Rio de Janeiro company halted payments when Guinea’s new president, Alpha Condé, ordered all mining deals signed under his predecessors be re-opened.
Rio Tinto in April 2011 struck a deal with the Condé government, paying $700 million and granting the government a 35% stake to resolve all outstanding issues.
BSGR’s role in the Simandou saga is now the subject of a probe involving six countries.
