RIO DE JANEIRO, March 13 (Reuters) - Brazilian iron ore miner Vale SA transferred its stake in a joint venture in Guinea to BSG Resources on Friday, the company said in a statement.
Vale said this did not mean it was renouncing its right to recover from BSG Resources (BSGR) the investments it lost in the venture in the Simandou deposit, one of the world’s largest untapped iron ore resources.
Vale is seeking to recoup from its partner at least part of the $1.1 billion it allegedly has lost after the Guinean government stripped the joint venture of mining rights in the country in April 2014.
A Guinean government panel charged with reviewing the West African nation’s mining deals said in a report it had found BSGR obtained the rights through “corruption” in 2008. Guinea said Vale had nothing to do with the alleged corruption.
BSGR, the mining unit of Israeli billionaire Beny Steinmetz’s business conglomerate, is seeking arbitration and has threatened to sue companies that invest in its former license area.
Guinea plans to hold a new auction to reissue mining rights to the northern half of Simandou. The southern half has been licensed to Anglo-Australian giant mining company Rio Tinto .
Vale will be allowed to enter the tender process, although investment appetite has dropped sharply in the mining sector in the last few years.
Vale, like its rivals, has been hit hard by a 50 percent slide this year in the price of iron ore, and is trying to slash costs and shed up to $10 billion worth of assets to help it weather the downturn. (Reporting by Anthony Boadle; Editing by Bernard Orr)