The UK鈥檚 anti-fraud investigating body said Monday it is probing Rio Tinto鈥檚 dealings in Guinea involving the giant Simandou iron ore project.
鈥淭he Serious Fraud Office has opened an investigation into suspected corruption in the conduct of business in the Republic of Guinea by the Rio Tinto group, its employees and others associated with it,鈥� the SFO said in a statement on Monday.
In November last year Melbourne-based Rio fired two executives involved in the project after an internal investigation uncovered a $10.5m payment in 2011 to a French national acting as a go-between with the West African nation鈥檚 government.
Simandou hasn鈥檛 only dented Rio Tinto鈥檚 reputation
Rio, the world鈥檚 second largest mining company, announced in October听it was听fully exiting the project by selling its stake to former partner Chinalco for up to $1.3 billion. Rio has spent more than $3 billion advancing the project (including a $700m payment to the Guinea government to resolve 鈥渙utstanding issues鈥� in April 2011) having first acquired the property in the late nineties.
Shares in Rio Tinto lost nearly 2% of its value in London on Monday amid a generally positive day for the mining sector, reducing its market valuation to $79 billion. Rio stock is up just over 5% year to date in line with a better trading environment for miners.
Simandou hasn鈥檛 only dented Rio鈥檚 reputation.
Israeli billionaire听Beny Steinmetz is fighting allegations of bribery when it acquired the rights to one half of Simandou (stripped from Rio over development delays) in 2008 when Guinea was under military rule.
BSGR, the mining arm of the diamond magnate, signed a multi-billion dollar deal with Brazil鈥檚 Vale in 2010 to jointly develop the project, but Guinea stripped BSGR鈥檚 rights in 2014. BSGR is seeking international arbitration over the loss of its rights and has also sued George Soros for $10 billion, accusing the hedge fund billionaire of running a defamation campaign against the company.
Rio last year had its lawsuit for damages against BSGR and Vale dismissed in a New York court.
In June, ex-Wall Street banker Mahmoud Thiam who served as Guinea鈥檚 mining minister during 2009鈥�2010 was听convicted听of laundering $8.5 million he was alleged to have听taken to help a Chinese company gain听mining concessions. Guinea is one of the world鈥檚 largest producers of bauxite, the primary ore used in the production of aluminum.
With complete control of Simandou, Beijing-based Chinalco may revive the stalled project for the southern block of the 2 billion-tonne deposit of high-grade iron ore.
The original $20 billion agreement signed in 2014 with the backing of the World Bank (which has since withdrawn support) called for a new 650km railway to Conakry, Guinea鈥檚 capital in the north, plus a new deep water port at a conservatively estimated cost of $7 billion, and infrastructure investments that would double the economy of the impoverished country.
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