{"id":1142369,"date":"2019-10-07T05:48:11","date_gmt":"2019-10-07T10:48:11","guid":{"rendered":"https:\/\/www.mining.com\/?p=1003767"},"modified":"2019-10-07T05:48:11","modified_gmt":"2019-10-07T10:48:11","slug":"fortescue-confirms-bid-for-vast-simandou-iron-ore-deposit","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1142369","title":{"rendered":"Fortescue confirms bid for vast Simandou iron ore deposit"},"content":{"rendered":"<p>Australia\u2019s Fortescue Metals Group<br \/>\n(ASX:FMG) has confirmed its interest in a slice of the giant Simandou iron ore deposit,<br \/>\nhanded back this year to the Guinean government by billionaire Beny Steinmetz\u2019s<br \/>\nBSG Resources.<\/p>\n<div class='d-flex justify-content-center'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>The committee in charge of an <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.mining.com\/guinea-extends-deadline-to-bid-for-vacant-blocks-of-giant-simandou-iron-ore-deposit\/\" >international tender for the project\u2019s blocks 1 and 2<\/a>, launched in mid-July, should come to a final decision in November, sources close to the matter <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/af.reuters.com\/article\/investingNews\/idAFKBN1WM0RK-OZABS\" >told <em>Reuters<\/em><\/a>.<\/p>\n<p>Both the consortium of Soci\u00e9t\u00e9 Miniere de Boke (SMB) and Singapore&#8217;s Winning, which is Guinea&#8217;s biggest bauxite exporter, have already acknowledged they submitted an offer.<\/p>\n<p>Brazil&#8217;s Vale (NYSE: VALE), the<br \/>\nworld\u2019s largest producer of iron ore, is also said to have paid for documents needed<br \/>\nto submit an offer, but decided not to do so. <\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p>Simandou is one of the world\u2019s richest reserves of high-grade iron ore, holding an estimated 2 billion tonnes of the steelmaking ingredient<\/p>\n<\/blockquote>\n<\/figure>\n<p>At two billion tonnes of iron ore<br \/>\nwith some of the highest grades in the industry, Simandou is one of the world\u2019s<br \/>\nbiggest and richest reserves of the steelmaking material, but it has a<br \/>\ncontroversial&nbsp;past.<\/p>\n<p>For more than a decade, it was the<br \/>\ncentre of a bitter dispute that involved Rio Tinto, Brazil\u2019s Vale SA and<br \/>\nIsraeli diamond mining tycoon Beny Steinmetz.<\/p>\n<p>In 2008, one of Guinea\u2019s former<br \/>\ndictators stripped Rio\u2019s rights over two of the four blocks the deposit had<br \/>\nbeen divided on and handed them BSG Resources, Steinmetz\u2019s mining arm. Rio was<br \/>\nable keep to the two southern blocks, but only after paying $700 million to the<br \/>\ngovernment in 2011. That guaranteed the miner tenure for the lifetime of the<br \/>\nSimandou mine.<\/p>\n<p>That deal came under scrutiny in<br \/>\n2016, forcing Rio to&nbsp;<a href=\"https:\/\/www.mining.com\/heads-roll-at-rio-tinto-over-simandou-probe-davies-valentine-fired\/\"  rel=\"noreferrer noopener\">fire two senior managers<\/a>&nbsp;over a questionable $10.5<br \/>\nmillion payment made to a consultant who helped the company secure the two<br \/>\nblocks and alerted authorities, including the US Department of Justice and<br \/>\nthe&nbsp;<a href=\"https:\/\/www.mining.com\/uk-serious-fraud-office-launches-probe-rio-tinto-simandou\/\"  rel=\"noreferrer noopener\">UK\u2019s Serious Fraud Office<\/a>.<\/p>\n<p>BSG Resources and Steinmetz were also subject of several investigations over&nbsp;<a href=\"https:\/\/mining.com\/guinea-government-to-strip-vale-bsgr-of-all-simandou-rights-97066\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">bribery<\/a>&nbsp;and&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/mining.com\/bsgr-may-pay-1-2bn-no-show-simandou-related-hearing\/\" >corruption accusations<\/a>, but it was able to put an end to all that in February this year, through a&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/www.mining.com\/web\/steinmetz-stages-guinea-comeback-sarkozy-brokered-deal\/\" >deal with&nbsp;Guinean President Alpha Conde<\/a>.<\/p>\n<p>As part of the agreement with<br \/>\nGuinea, BSGR agreed to walk away from blocks 1 and 2 of the Simandou project,<br \/>\nbut retained the right to mine&nbsp;<a href=\"https:\/\/www.mining.com\/former-xstrata-boss-mick-davis-mine-guineas-zogota-iron-ore-deposit\/\"  rel=\"noreferrer noopener\">the smaller Zogota deposit<\/a>.<\/p>\n<p>A few weeks later, a London<br \/>\narbitral court told BSGR to pay $1.2 billion to Vale, its former partner<br \/>\nGuinea, due to \u201cfraud and breaches of warranty\u201d in inducing the Brazilian miner<br \/>\nto enter the joint venture. The tribunal based its decision partly on the fact<br \/>\nthat the government&nbsp;<a href=\"https:\/\/www.mining.com\/guinea-government-to-strip-vale-bsgr-of-all-simandou-rights-97066\/\"  rel=\"noreferrer noopener\">revoked the concession in 2014&nbsp;<\/a>after finding that BSGR<br \/>\nhad obtained it by bribing officials.<\/p>\n<h2><strong>Tender transparency questioned<\/strong><\/h2>\n<p>Strong iron ore prices and the<br \/>\nresolution of Steinmetz-related issues increased Guinea\u2019s chances of finding<br \/>\ncompanies interested in acquiring the rights for the vacant blocks, pushing it<br \/>\nto launch a tender.<\/p>\n<p>But analysts, including Eric Humphery-Smith from Verisk Maplecroft, have called the&nbsp;<a href=\"https:\/\/www.maplecroft.com\/insights\/analysis\/simandou-guinea-iron-ore-tender-likely-to-be-opaque\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">transparency of the process into question<\/a>.<\/p>\n<p>One of the main reasons, argues<br \/>\nEric Humphery-Smith, an analyst at Verisk Maplecroft in London, is that<br \/>\nprospective developers must pay $300,000 to access tender specification<br \/>\ndocuments.<\/p>\n<p>\u201cSuch pay-to-play terms undermine<br \/>\nthe Minister\u2019s claims of transparency,\u201d Humphery-Smith says.<\/p>\n<p>The experts notes that while it\u2019s<br \/>\ntrue that the current process is more transparent than the first-come,<br \/>\nfirst-served method, bidders may still be exposed to reputation risks:<\/p>\n<blockquote class=\"wp-block-quote\">\n<p>\u201cThere are indications that the British law firm Phanar Legal Ltd, selected as the third-party transaction adviser for the tender, may have a conflict of interest. The firm\u2019s director Philip Rogers is a co-director of Guinea Bauxite Corporation Ltd (GBC), a mining company established in January 2019 by Alexander Zotov, a Russian businessman. Zotov holds an active production licence for a bauxite mine in coastal Guinea through his mining company Eurasian Resources (EAR).\u00a0<\/p>\n<p>\u201cEven if Rogers acts only as a secretary for these companies, his active interest in the Guinean mining sector leads one to question his law firm\u2019s impartiality in the Simandou tendering process. In other words, Phanar\u2019s management of the tender could lead the contracting authorities to look favourably on a prospective bid by one of Zotov\u2019s companies for another mine concession.\u201d<\/p>\n<\/blockquote>\n<p>Rio Tinto holds a 45% stake in<br \/>\nblocks three and four of Simandou, which it is&nbsp;<a href=\"https:\/\/www.mining.com\/rio-tinto-looks-at-developing-simandou-again-report\/\"  rel=\"noreferrer noopener\">actively planning&nbsp;to develop<\/a>. State-controlled<br \/>\nChinalco owns 40% and the Guinea government 15%.&nbsp;<\/p>\n<p>Fortescue Metals Group is the world\u2019s No. 4 iron ore<br \/>\nminer.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Soci&eacute;t&eacute; Miniere de Boke (SMB) and Singapore&#8217;s Winning, which is Guinea&#8217;s biggest bauxite exporter, have also submitted offers.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2849,949,369,4,2640],"tags":[43],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1142369"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1142369"}],"version-history":[{"count":2,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1142369\/revisions"}],"predecessor-version":[{"id":1142371,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1142369\/revisions\/1142371"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1142369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1142369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1142369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}