BSG Resources Ltd., a company controlled by Israeli billionaire Beny Steinmetz, said the government of Guinea is preparing to strip its joint venture with Vale SA (VALE5) of the rights to its mining assets in the country.
A new government agency, Comite Technique de Revue des Titres et Conventions Miniers, or CTRTCM, has “been entrusted with the task of preparing the expropriation of VBG’s assets,” closely held BSG said today in a statement, referring to its venture with Vale, the world’s biggest exporter of iron ore.
The venture is planning a $10 billion iron ore mine in the country at Simandou and the dispute with the government comes amid a review into the agreements signed with mining companies. The company’s president was recently barred from entering the country “on baseless grounds of domestic security,” it said today. “The denial of entry is only the latest of a number of illegal acts by the Government of Guinea,” including the creation of CTRTCM, BSG said.
It’s “the latest example of an illegitimate government resorting to harassment to make it impossible for BSG Resources, and its VBG joint venture, to exercise their contractual rights legitimately awarded in Guinea,” the company said.
The ban on the company’s president visiting Guinea is a security matter and is unrelated to mining and BSG Resources, said Albert Damantang Camara, a government spokesman. The allegations that the government is seeking to strip the joint venture of its mining rights are “totally unfounded” and not worthy of comment, he said.
BSG in November said it received a letter from Guinea regarding an investigation into how the venture with Vale obtained mining rights.
It acquired rights to the part of the Simandou deposit in 2008 after Rio Tinto Group, the world’s second-largest mining company, was ordered by the government to give up part of its license area. Vale agreed to buy 51 percent of the project for as much as $2.5 billion in 2010.
Guinean President Alpha Conde said in January the country was seeking a way for Vale to resume work at the project in the West African nation.
Vale’s press office in Rio declined to comment.
For the original version of this article, please go to the Business Week website: http://www.businessweek.com/news/2013-03-25/bsg-says-guinea-preparing-to-strip-rights-to-vale-mine-venture