BSGR pushes ahead with arbitration against Guinea over Simandou mining rights

By Silvia Antonioli

LONDON, Sept 10 (Reuters) - BSG Resources (BSGR) said on Wednesday it has taken further legal steps against Guinea's decision to revoke its mining rights on a giant iron deposit in the country, which is likely to complicate Guinea's effort to re-issue such concessions.

BSGR, the mining unit of Israeli billionaire Beny Steinmetz's business conglomerate, started the proceedings in May by filing a notice of dispute at the International Centre for Settlement of Investment Disputes (ICSID).

On Wednesday it moved the case forwards by filing an arbitration request, which formally starts proceedings between BSGR and the Republic of Guinea.

The mining company is seeking the restitution of the mining titles over the northern part of Simandou deposit in Guinea confiscated in April as well as damages arising from the revocation of the rights.

Guinea confirmed that ICSID had registered BSGR's request for arbitration filed against it and said it considers all the allegations made by BSGR to be entirely baseless.

"The Republic of Guinea will leave it to the arbitration process to decide the strength of the evidence produced by both parties and is confident that the claims made by BSGR will be defeated," government spokesman Albert Camara said in a statement.

Guinea stripped BSGR and its partner in the venture, Brazil's Vale, of their right after a technical committee charged with reviewing the West African nation's mining deals accused BSGR of obtaining the rights through corruption.

BSGR refuted the claims and said that the confiscation process conducted by Guinea has "violated deliberately both Guinean and international fundamental principles of law."

The Guinea government is preparing for a new tender over the disputed concessions on the northern half of Simandou. However some potential buyers might be put off by the arbitration proceedings involving the rights.

Global miner Rio Tinto (Xetra: 855018 - news) , which already owns a stake in the southern part of the deposit, has indicated it would not take part in a tender for the northern half. (Additional reporting by David Lewis; Editing by Susan Thomas)