Beny Steinmetz
Beny Steinmetz will probably be denied the rights to extract iron ore deposits in Guinea due to concerns about corruption and bribery. Photo by Tomer Appelbaum
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Guinea’s government has accepted a report recommending the cancellation of two iron ore concessions held by Israeli billionaire Beny Steinmetz’s conglomerate, a spokesman said on state television on Thursday.

A technical committee charged with reviewing the West African nation’s mining deals released a report last week accusing BSG Resources, the mining branch of Steinmetz’s conglomerate, of obtaining the rights through corruption.

The committee’s report recommended that Guinea withdraw the mining permit held by VBG, the joint venture of BSGR and its joint venture partner, Brazilian miner Vale, in the giant Simandou iron ore deposit and cancel its Zogota mining concession.

“The cabinet approves the recommendations of the technical committee,” government spokesman Damantang Albert Camara said, adding that the decision was linked to the “fraudulent nature of the conditions in which the permits were granted.”

Reuters reported earlier on Thursday that the committee’s recommendations would be approved, citing a senior government source. The same source said the contracts would be officially canceled via a presidential decree late on Thursday evening.

BSGR has denied the allegations and said it would seek international arbitration.

“BSGR obtained the mining rights lawfully and will mount a vigorous effort to overturn this decision, which is as predictable as it is unlawful,” BSGR said in a statement sent to Reuters.

Officials for Vale, the majority shareholder in the VBG venture, were not immediately available for comment.

Vale, the world’s largest iron ore producer, did not participate in the corrupt practices, the report found, as it was not involved in acquiring the licenses.

While the committee called for the government to exclude VBG from any future process to re-allocate the licenses, Vale may be able to bid for the permits on its own.

According to a source close to the Brazilian miner, the company had spent more than $1 billion on its Guinean venture when it put the project on hold at the end of 2012.

With reserves of iron ore, gold, bauxite and diamonds, Guinea is one of Africa’s richest countries in terms of resources, but it remains one of the world’s poorest in terms of development, ranking 178th out of 187 countries in the UN Human Development Index last year.