The Simandou mine, what is it?
>The Simandou mine is a large iron mine located in the Simandou mountain range of southern Guinea's Nzérékoré Region. Simandou represents one of the largest iron ore reserves in Guinea and in the world having estimated reserves of 2.4 billion tonnes of ore grading 65% iron metal.
>The first entrant on the scene was the miner (((Rio Tinto)))++, which acquired exploration rights in 1997. But Rio was deemed to have dragged its heels on the project. The Guinean government, under its authoritarian president, Lansana Conté, grew impatient, and stripped the company of half its rights in July 2008. Six months later, shortly before Conté’s death, BSGR won the rights to blocks 1 and 2 of Simandou.
>The decision was met with some surprise: BSGR was not considered a specialist in iron ore mining. (It disputed this at ICSID, arguing it had plenty of expertise.) BSGR, first registered in Jersey, then Guernsey, was founded by Steinmetz in 2003, and focused on (((diamond mining,))) the source of his family’s wealth. The ultimate owner of the company is a (((Lichtenstein foundation called Balda and Steinmetz))) and his family are the main beneficiaries. Steinmetz himself is thought to be worth around $2.9bn (£2.4bn).
>BSGR paid nothing for the licence to explore Simandou, though it says that it spent $160m developing the mine. In any case, it always intended to bring in a partner: in 2010, with the price of iron ore soaring, the Brazilian mining company Vale agreed to pay $2.5bn for 51pc of BSGR’s slice of Simandou. Vale made an upfront payment of $500m; the rest was never paid. It was dubbed “the deal of the century”, a sensational victory for Steinmetz.
Simandou could treble Guinea's GDP
>But matters began to unravel with the election of Alpha Condé as president of Guinea in late 2010. Condé’s government did not like the way Guinea’s biggest asset had been parcelled up. The following year, Rio paid $711m to settle “outstanding issues” in Guinea and shore up its claim to blocks 3 and 4 of Simandou. Steinmetz called this “extortion”. He claimed the Guinean government demanded $1.25bn from BSGR for the same purpose, and refused to pay. Guinea says it floated the idea but never formally demanded any money.
>From then on, according to BSGR, Guinea resolved to eject it from Simandou. Vale walked away in 2012, blaming a slump in the iron ore market, and in 2014, a government committee cancelled BSGR’s rights.
>The legal fall-out has been considerable. Rio, a FTSE 100 company, sued BSGR and Vale in 2014, but had its case thrown out on a technicality. Rio then reported itself to the authorities last year over a $10.5m payment it made in 2011 to a French banker for his help arranging its settlement with Guinea. BSGR has said it will counter-sue Rio for damages; Rio has said it will defend itself “robustly”.
>Vale is also seeking arbitration against BSGR over their failed joint venture in Guinea. Neither Vale or Rio would comment on the ICSID hearing.
>To date, two people have been convicted on charges relating to corruption in Simandou. Frederic Cilins, a BSGR associate who forms a central part of Guinea’s case, served two years in prison in the US for obstructing an (((FBI investigation.))) Earlier this year, Mahmoud Thiam, Guinea’s former minister of mines, who backed BSGR’s deal with Vale, was found guilty of laundering $8.5m in bribes he allegedly took in exchange for helping a Chinese company secure mining rights.
Prosecutors in the US, Switzerland and Israel continue to circle the case. In December, Israeli police detained Steinmetz and Asher Avidan, the former head of BSGR in Guinea. Both have restrictions on where they can fly, preventing them from appearing before ICSID in person.
For Steinmetz, the ICSID hearing was a chance to elaborate on his passionately held belief that BSGR is the victim of a conspiracy. The target of his fury is the billionaire philanthropist (((George Soros,))) who became an adviser to President Condé in 2010. Steinmetz claims Soros was motivated by personal animosity to sabotage BSGR’s claims in Guinea, saying: “He’s nuts. The guy has an obsession with me.” BSGR has threatened to sue Soros for $10bn in damages. Soros’s representative calls Steinmetz’s claims a “PR stunt”.