Rio Tinto Sues Vale and BSGR Over Iron Ore Rights in Guinea
Rio Tinto has recently filed a complaint against rivals Vale and BSG Resources, including BSGR owner and Israeli billionaire Beny Steinmetz, over concessions at the prospective Simandou mine in Guinea. This move has touched off one of the largest legal battles in the mining sector in years.
Simandou is one of the most valuable iron ore deposits in the world, and could potentially help one of Africa’s poorest countries become a more developed nation; unfortunately, the mine has been paralysed by battles over concessions for years.
Rio Tinto lost half of the rights to Simandou in Guinea in 2008. Former President Lansana Conte’s government revoked Rio’s permit on the grounds that the mining company had been progressing too slowly towards full operation. Since then, Rio has maintained that it had complied with the terms in its lease of the northern region of Simandou.
After pulling Rio’s permit, the government transferred it to BSGR. This mining branch of Steinmetz’s conglomerate in turn sold 51 percent of the sites assets to Brazil’s Vale in 2010. Recently, the current Guinean government stripped the tenements from BSGR and Vale based on the report from a government panel that was charged with reviewing the West African nation’s mining deal.
The report came to the conclusion that BSGR had obtained its rights to Simandou through corruption. In an attempt to distance the company from the accusation Vale filed a billion-dollar action against BSGR before the London Court of International Arbitration earlier this week.
Rio Tinto followed with a suit a few days later, claiming both companies, Steinmetz and a few government officials were involved in Rio’s loss of the northern section of Simandou in 2008 via a conspiracy that included the use of “highly confidential and proprietary information” to devise a fraudulent scheme.
"Rio Tinto's injuries are clear and definite and include the loss of billions of dollars in assets, as well as the lost investment of its activities in Simandou," Rio said in the filing. "This is a case about the theft of Rio Tinto's valuable mining rights by the defendants through a scheme in violation of the Racketeer Influence and Corrupt Organizations Act.”
Although Guinea’s current president, Alpha Conde, has come forward to say that Vale had nothing to do with the alleged corruption, Rio Tinto made it clear in their lawsuit that they believe Vale was at the heart of the conspiracy. The lawsuit also calls out Mahmoud Thiam for allegedly accepting millions of dollars in bribes from BSGR owner Steinmetz, and for facilitating the transfer of mining license to BSGR.
So far, Steinmetz has vehemently denied the charges and is seeking international arbitration; Vale has declined to comment.
Rio Tinto’s settlement will be in the billions, but a specific number is not known at the current time. They claimed that they had spent hundreds of millions trying to develop Simandou until 2008, and have lost billions in assets because of the loss of the mine. Full production of Rio’s southern Simandou mine will begin in 2019, with exports of up to 95 million tonnes of ore a year – a third of the company’s total current capacity.
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.