BSGR wins battle in corruption probe over Simandou

Mining billionaire Beny Steinmetz’s BSG Resources has received a letter from the French government stating an article published last year by Le Canard, which said the magnate and his company had been part of a coup effort against Guinea’s present leader, was based on fake documents.

BSGR was awarded rights over Guinea’s Simandou, one of the world's largest untapped iron ore deposits, a few days before the death of dictator Lansana Conte, in 2008, after spending more than $160 million exploring the prospect. The article published last year claimed to have accessed the country’s secret service documents, which showed Steinmetz and his firm had been involved in a plan to overthrow current President Alpha Condé.

According to BSRG’s emailed statement, Le Canard's story was “exploited by the Guinean government ahead of legislative elections to undermine BSGR and Mr. Steinmetz,” to the point Guinea’s Minister of Security, Madifing Diane, said the country was in danger and that strings were “being pulled from outside."

In 2010 BSGR sold a controlling half of its concession to Brazil’s Vale (NYSE:VALE) for $2.5 billion.

But after forking over the first half a billion dollars, the Rio de Janeiro-based firm halted payments when Guinea's new president, Alpha Condé, ordered all mining deals signed under his predecessors be re-opened.

Rio Tinto came back in the picture in April 2011, after streaking a deal with the Condé government. It paid $700 million and granted Guinea a 35% stake to resolve all outstanding issues. Now, the world’s No. 2 miner is developing the southern part of the vast mountain deposit with first production from the massive $20 billion project expected by late 2018 at the earliest.

BSGR's role in the Simandou’s rights saga continues to be investigated in the US for potential illegal payments made to Guinean officials and to Mamadie Toure, a wife of the deceased former president Conte, to obtain mining concessions for BSRG in Guinea, as well as the subsequent transfers of those payments into the US.

The outcome of the investigation could influence Guinea's decision on whether to strip BSGR of the rights to develop the northern portion of Simandou.

The sought after iron ore deposits in Guinea are said to have the potential to transform the fortunes of the impoverished West African nation.