Guinea to cancel BSG Resources-Vale mining rights

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Associated Press

Posted on April 19, 2014 at 1:03 PM

Updated Saturday, Apr 19 at 2:07 PM

CONAKRY, Guinea (AP) — The government of Guinea is planning to revoke the mining rights to one of the largest untapped iron ore deposits in the world, following a watchdog's recommendation.

A state-sponsored committee tasked with reviewing mining deals in the West African country published a report earlier this month that said it had evidence the rights to exploit the Simandou and Zogota deposits were obtained through corrupt practices and recommended they be canceled. The deal is also under U.S. investigation.

Government spokesman Damantang Camara announced late Friday that Guinea would follow the committee's recommendation. He later acknowledged that canceling the rights would require legal procedures but gave no details.

The mining rights are held by a joint-venture owned by Israeli billionaire Beny Steinmetz's BSG Resources and Brazilian mining firm, Vale. But the report focused its allegations on BSG Resources, accusing representatives of the company of promising bribes in exchange for exploitation rights.

"BSGR obtained the mining rights lawfully and will mount a vigorous effort to overturn this decision, which is as predictable as it is unlawful," the company said in an emailed statement.

Vale has said it does not believe it has been accused of wrongdoing.

American authorities are also investigating the deal for potential violations of the Foreign Corrupt Practices Act and possible money laundering. An associate of Steinmetz pleaded guilty last month in U.S. federal court to obstructing the investigation. Some of the evidence cited in the Guinean report was collected by FBI wiretaps.

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