* Vale lost permits after partner accused of corruption
* Permit covered giant Simandou iron ore deposit
* BSG Resources denied allegations, seeking arbitration (Adds Conde quote, no comment from Vale, details)
By Stephanie Nebehay
GENEVA, April 30 (Reuters) - Guinea’s President Alpha Conde said on Wednesday he hoped Brazilian miner Vale would bid to reclaim two iron ore permits, because the company had not been involved in the alleged corruption that led to their cancellation.
Guinea cancelled the two mining concessions jointly held by Vale and BSG Resources earlier this month, after a government-appointed technical committee accused BSGR of obtaining the rights through corruption.
BSGR, the mining branch of Israeli billionaire Beny Steinmetz’s conglomerate, has denied the allegations and said it will seek international arbitration.
Conde told reporters during a visit to Geneva on Wednesday that Vale, the world’s largest iron ore producer, had done nothing wrong.
“We will launch an open and transparent bidding process ... Vale was not involved in the corruption or aware of it and we strongly hope that Vale will participate,” Conde said.
“Vale can come back through the bidding process,” he added.
Vale entered into a joint venture with BSGR to mine the giant Simandou iron ore deposit and the nearby Zogota concession after the permits were already acquired and has denied any wrongdoing.
According to a source close to the company, Vale had spent more than $1 billion on its Guinean venture by the time it put the project on hold at the end of 2012.
Vale has not said whether it will try to get the concessions back and company officials were not immediately available for comment after Conde’s statement.
Guinea is already the world’s top supplier of the aluminium ore bauxite and its iron ore reserves have drawn billions of dollars in investments.
However, investor interest in the country has cooled amid political instability and a contract review launched in 2011 to review mining deals signed before Conde came to power.
Conde said that around 800 permits, most of them inactive, have been cancelled during the process. Eighteen contracts were still under review, he added.
He thanked Guinea’s international partners for helping it investigate its mining sector.
“Even though we are weak ... the cooperation with the judicial authorities in Switzerland, the United States, France and even the tax havens kept us from being at a disadvantage. I think that is the most important lesson of Simandou,” he said.
Frederic Cilins, a former BSGR representative in Guinea, was arrested last year as part of a U.S. investigation into payments made to Guinean officials to secure mining rights to Simandou.
He pleaded guilty in New York last month to one count of obstructing a criminal investigation.
With reserves of iron ore, gold, bauxite and diamonds, Guinea is potentially one of Africa’s richest countries. But it remains one of the world’s least developed, ranking 178th out of 187 countries in the U.N. Human Development Index last year. (Writing by Joe Bavier; Editing by David Lewis and Andrew Heavens)