“Evidence” against Vale in Simandou case may hinder $2bn award
Billionaire Beny Steinmetz, the founder and owner of a
company embroiled in a long-dragged dispute with Vale (NYSE: VALE) over lost
rights to the massive Simandou iron ore project in Guinea, claims to have fresh
evidence that will help him reverse a $2bn arbitration award to the Brazilian
miner.
The documents, the Financial Times reported on Sunday,
allegedly prove that Vale was aware of potential problems with how the rights
to develop Simandou had been obtained, but “chose to close its eyes.”
The case goes back to 2010, when Vale agreed to buy 51% of
the iron ore licenses belonging to BSG Resources, Steinmetz’s mining arm.
Four years later, Guinea revoked both the Rio de
Janeiro-based miner and BSGR’s rights over the massive iron ore deposit.
The decision followed a government probe that concluded they
obtained their licenses through corruption, allegations that Steinmetz and BSGR
have always denied.
Vale then filed a successful claim against its former
partner company in the London Court of International Arbitration to recover an
upfront payment to BSGR and money it invested in Guinea.
The figure requested and later awarded by a London
arbitration court amounted to $1.25 billion plus interest and costs, totalling
$2 billion.
Steinmetz says the evidence, gathered by private
intelligence agency Black Cube, will allow him to serve subpoenas on Vale and
Rio Tinto (ASX, LON: RIO), which still holds a 45% stake in the other half of
Simandou.
The magnate told FT he believed both companies have
documents that can help his case.
“Not coincidental” move
Vale claims Steinmetz’s move is just a new attempt to avoid
paying the massive compensation awarded to the company.
Earlier this month, the world’s no. 1 iron ore miner
launched legal action in New York to determine whether funds paid to BSGR
within the framework of their former Simandou partnership were used for
property investments in the United States.
Vale expects to prove its former partner in Guinea
fraudulently funneled $500 million into Manhattan real estate’s magnates Aby
Rosen and René Benko.
At two billion tonnes of iron ore with some of the highest
grades in the industry, Simandou is one of the world’s biggest and richest
reserves of the steelmaking material.
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