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Rio Tinto alerts UK, U.S. watchdogs to payments in Guinea

Reuters - UK Focus

(Adds background on bribery probes, Simandou)

MELBOURNE, Nov 9 (Reuters) - Global miner Rio Tinto (LSE: RIO.L - news) said on Wednesday it had alerted U.S. and UK authorities to $10.5 million in payments made to a consultant on its Simandou iron ore project in Guinea and has suspended two senior executives as a result.

Rio Tinto said it became aware of emails from 2011 in August "relating to contractual payments totalling $10.5 million made to a consultant providing advisory services on the Simandou project in Guinea".

An internal investigation led it to flag the issue to U.S. and UK agencies and it said it was in the process of contacting Australian authorities as well.

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The company has suspended the head of its energy and minerals division, Alan Davies, who was in charge of Simandou in 2011. The group's legal and regulatory affairs executive, Debra Valentine, who was due to retire next May, has also stepped down.

"Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities. Further comment at this time is therefore not appropriate," the company said in a statement to the Australian stock exchange.

Mining companies have been a focus of interest in global corruption investigations, with BHP Billiton (NYSE: BBL - news) last year paying $25 million to settle charges that it violated a U.S. anti-bribery law in failing to properly monitor its program sponsoring foreign government officials at the 2008 Olympics in Beijing.

Rio Tinto long chased plans to develop Simandou, which it touted as one of the world's most valuable iron ore deposits. It even sued rival Vale (Swiss: VALE.SW - news) over the loss of half the rights to the lode.

However, last week it agreed to sell its stake in the $20 billion project to Chinese state-owned Chinalco, after writing off the project earlier this year on diminished prospects of it being developed anytime soon. (Reporting by Sonali Paul; Editing by Andrew Hay and Dan Grebler)