UPDATE 2-Rio Tinto sues Vale, Steinmetz, BSGR over Guinea iron deposit rights

Wed Apr 30, 2014 5:23pm EDT

* Relates to Rio Tinto loss of rights over Simandou deposit

* Steinmetz and BSGR dismiss charge, Vale no comment

* Development paralysed by battles over concessions (adds details, comment from Guinea government)

By Silvia Antonioli

LONDON, April 30 (Reuters) - Mining giant Rio Tinto <RIO. L> said on Wednesday it had filed a complaint against competitor Vale, Israeli billionaire Beny Steinmetz and BSG Resources (BSGR) over valuable mining concessions in Guinea.

The lawsuit, filed in the United States District Court for the Southern District of New York, relates to Rio Tinto's loss in 2008 of half the rights to Simandou, in Guinea, one of the world's most valuable iron ore deposits.

Rio Tinto alleged in its complaint that the defendants devised a fraudulent scheme to steal its rights over the northern half of Simandou. Steinmetz and BSGR dismissed the charge and Vale declined to comment.

Exploiting Simandou could help one of Africa's poorest countries to prosper but the mine development has been paralysed by battles over the concessions.

Anglo-Australian miner Rio Tinto said in its complaint it had spent hundreds of millions trying to develop Simandou until 2008, when former President Lansana Conte's government revoked its permit on the northern half of the deposit and then transferred it to BSGR, the mining branch of Israeli billionaire Beny Steinmetz's conglomerate.

At the time, the government told Rio it had moved too slowly.

Rio Tinto maintained that it had complied with the terms of the leases.

BSGR then sold 51 percent of its Guinean assets to Brazil's Vale in 2010, when they created joint venture VBG in a $2.5 billion deal.

"Rio Tinto's injuries are clear and definite and include the loss of billions of dollars in assets, as well as the lost investment of its activities in Simandou," Rio Tinto said in the filing.

"This is a case about the theft of Rio Tinto's valuable mining rights by the defendants through a scheme in violation of the Racketeer Influence and Corrupt Organizations Act," it added in the filing.

Earlier this month Guinea's government stripped BSGR and its joint venture partner Vale of their rights over Simandou and the Zogota deposits in Guinea after a government panel charged with reviewing the West African nation's mining deals said in its report it had found BSGR obtained the rights through "corruption".

BSGR has repeatedly denied any wrongdoing and said it would seek international arbitration. Guinea's President Alpha Conde said on Wednesday that Vale had had nothing to do with the corruption alleged by the government panel.

A spokesman for Beny Steinmetz and BSGR called the Rio Tinto lawsuit "baseless and bizarre".

Vale chief executive Murilo Ferreira said it was too early to comment on Rio Tinto's lawsuit. He added that the company was reviewing its options over the future role it will play in Guinea after losing the concessions over Simandou.

"This is an issue between mining companies and the government has no intention of interfering or commenting in such a way as to make people question our impartiality," said Damntantang Albert Camara, a Guinea government spokesman.

"One thing is for sure - there will be a new bidding round to chose the new owners of these permits." (Additional reporting by Saliu Samb in Conakry, Stephen Eisenhammer in London, David Lewis in Dakar, Stephanie Nebehay in Geneva, Jeb Blount in Rio de Janeiro, David Rohde in New York; Editing by Keiron Henderson and Andrew Heavens)

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