Controversies surrounding Simandou hills in the impoverished nation of Guinea have brought the production of iron ore to a complete stop. Being potentially the largest iron ore deposit in the world valued at an estimated 2.2 billion tons, Simandou and therefore the people of Guinea have remained the sole major victims of a multi-billion dollar fraud, which ultimately restricts Guinea’s prospective economic development.
Simandou and therefore the people of Guinea have remained the sole major victims of a multi-billion dollar fraud, which ultimately restricts Guinea’s prospective economic development.
Simandou Iron Ore Deposits
Holding total reserves estimated to be greater than the combined world iron ore production in 2013, Simandou is a key target in Guinea, attracting major players and predators. The “Simandou Affair” constitutes the epitomy of the tragedy affecting most Western African countries with substantial mining deposits : despite being rich in natural resources, they have always struggled to monetize their assets for the benefit of their global economy. Iron ore deposits at Simandou are estimated at $80 billion. In addition to its value the project could lead to the creation of at least 45,000 additional jobs in the region and eventually raise the GDP of the country by $6 billion.
Guinea’s GDP in 2015 was $6.7 billion. Simandou’s iron ore production would provide a massive boost to Guinea’s economy. However, the project has been constantly delayed for over 25 years, due to the ongoing succession of corporate frauds and political unrest.
Key players in Simandou’s corruption
Some notable industry giants involved in controlling Simandou’s abundant natural iron ore deposits are Rio Tinto, Vale and BSG Resources (BSGR). The rights were first acquired by Rio Tinto, a British-Australian mining company, in the early 90’s and under the supervision of President Lansana CONTE. The company has never “managed” to launch the exploitation of the mine and to monetize its license rights, despite the evident fact that such an occurrence would have positively impacted the country’s GDP.
Numerous reasons accounts for such a standstill, among them one may resides in existing conflicting interests between Rio Tinto and Guinea : Allegedly, Rio Tinto deliberately dragged its heels in developing the Simandou deposit in order to stop other miners from setting up shop in Guinea. Furthermore, the longer it locked up mining in Guinea, the longer Rio Tinto could charge higher prices for the mining it was doing all over the rest of the world,” said James Libson of Mishcon de Reya, as reported by Jon Yeomans in the Telegraph. In other word, preventing the development of Simandou, it is alleged, did allow Rio Tinto to protect the prices of its overall production at the expenses of Guinea.
Due to irregularities in the original agreement signed between Rio Tinto and former President Lansana CONTE, identified in 2008, Rio Tinto lost 50% of Simandou to BSGR, who paid $160 millions to acquire the rights of the northern half of the hill (The Market Mogul – Elisabeth Wiebusch, Dec 1 2016).
However, in 2014, under the formation of the new government presided by President Alpha CONDE and the support of a very special advisor under the person of Mr George SOROS, a private inquiry funded by Mr Soros non Profit Organization concluded that BSGR had paid bribes to Minister THIAM to win the rights of Simandou. At this point, it is relevant to notice that at the time of the attributions of the rights to BSGR, Mr Thiam was not appointed at the Ministry of Mines.
This private inquiry lead to the cancellation of any BSGR’s rights to the northern half of the mines. BSGR strongly denied the finding. Following the cancellation of BSGR’s rights, Rio sued the company, saying it had conspired to steal Simandou.
Eventually, and against all odds, in 2016, A New York court threw the case out , ruling the acquisition of the rights by BSGR in 2008 were processed without any trace of fraudulent act.
Now BSGR, in an old Testament type of tale, is endorsing the role of David going against Soros and Rio Rinto , the present tale’s Goliath, seeking to turn the tables and demanding serious compensation after any individual that contributed to the libel campaign. The hearing is scheduled to last two weeks, with Mr Steinmetz expected to give testimony via videolink on Wednesday May 24th 2017. If BSGR is successful in its case, it could have its rights to half of Simandou reinstated.
Fate of Simandou
Simandou, has remained unproductive for over two and a half decades. With a multi-level deal involving billions of dollars, companies are now struggling to reclaim their rights on the mountain range that can dominate iron ore production for decades to come (Global Witness – Daniel Balint, Mar 1 2017). With an annual capacity of 950 million tons of iron ore production, Simandou undoubtedly is a natural resource worth monetizing. Its production will grow the economy of Guinea considerably.
Conclusively, the fate of Simandou is yet to be decided, which faces the irony shared by resourceful African countries (The Telegraph – Tara Cunningham, April 15 2017). With ongoing lawsuits to claim the rights of mining at Simandou, no one officially rips the benefits of the biggest iron ore reserve in the world except for fraudsters that remain to be identified and brought to court to face their responsibilities.