Guinea Up Against Legal Action Brought On by BSG Resources

In an attempt to prevent the West African nation of Guinea from taking away one of the most highly prized and productive iron-ore deposits, BSG Resources has entered into the initial stages of legal action against the country.

BSG Resources is based in Guernsey, and is the mining arm of Israeli tycoon Beny Steinmetz's family conglomerate. The basis of the legal action opened up by BSG Resources cites a demand for President Alpha Condé to reverse a recent decision to cancel the company's rights to one of the mining world's most desirable prizes, a portion of an approximately 600-square-kilometer concession in the Simandou Mountains.

President Alpha Condé’s decision to cancel the company’s rights was apparently influenced by the publication of a Guinea government report which alleged that BSG Resources were awarded the rights to the portion of prized mining operations through corruption and illegitimate proceedings. The main ammunition behind BSG Resources’ call for legal action is their claim in having taken no part in any corrupt behavior. In addition, another significant element of the company’s legal action is based on the accusation that President Alpha Condé’s government is trying to seize and commandeer BSG Resources rights through covert actions. “BSG Resources is seeking the restitution of its mining titles and agreements as well as damages arising out of the revocation of these interests,” said BGS Resources.

In response to BSG’s claims, a spokeswoman for the Guinean government said: “The government of Guinea has not been formally notified of the claim by BSG Resources and hasn't received a copy of it, formally or informally. We will not comment until such a notification is received.”

The notice of legal dispute submitted to the London-based International Centre for Settlement of Investment Disputes by the privately owned BSG Resources on May 14th. This dispute marks the latest barrage in a growing legal war over Simandou. Last week, the concession's former owner, iron ore behemoth Rio Tinto RIO.LN -0.28% PLC, filed a lawsuit in New York against BSG Resources, Mr. Steinmetz and BSG Resources’ previous Guinean joint venture partner, Vale SA, VALE5.BR -0.11%, alleging that they colluded to rob the Anglo-Australian company of half its prior rights to Simandou.

Of the Rio Tinto lawsuit, BSG Resources referred to them as “baseless and bizarre”. “BSG Resources will look to take immediate steps to litigate against those parties who wrongfully interfere in its lawful interests,” the company warned. On the other side of the argument, it was Vale's chief executive Murilo Ferreira who claimed that it was “up to the accuser to show proof, under penalty of acting in bad faith.”