BSG Delays Work At Simandou Site

BSG Resources, the mining company controlled by Israeli diamond investor Beny Steinmetz, said it has been “temporarily” delayed from starting work at its Simandou concession in Guinea, part of which it was awarded last month after the area was stripped from Rio Tinto Group.

“There was some confusion about the boundary between blocks two and three, which is the line between us and Rio, so to end confusion we agreed to stop work until the exact geographical boundary is marked,” said Chief Executive Officer Marc Struik by phone from Johannesburg today. “It’s a bit of a tense situation, so it’s important to avoid ambiguity.”

On 11 December Guinea ordered a “compulsory relinquishment” of the northern half of Simandou by Rio, the world’s second-largest iron-ore producer. The country, run by a military junta since the death of President Lansanna Conte on 23 December, awarded blocks one and two in the northern part to BSG, while confirming Rio’s right to the southern section.

Rio maintains it is entitled to the entire licence.

“We stand by our view that we have the legal claim over the Simandou concession and would like to discuss the situation with the government at an appropriate time,” said Rio spokesman Nick Cobban. While he said he is unaware of any discussion, Rio has invested $450 million in the project and “continues to conduct essential exploration work” there, he said.

However, Struik claims there is no confusion about the license. “We’ve been granted a three-year exploration permit by the Guinean government during which time we have to carry out a certain amount of work.”

Government engineers are at Simandou and should take no longer than two weeks to mark the boundary “We’re ready to go at the site, and that’s going to happen in the next week or so,” Struik said.

BSG has been conducting drilling and exploration at sites adjacent to the blocks it was awarded since 2006, Struik said on Dec. 11. Mr Steinmetz also controls resources in the Democratic Republic of Congo, Sierra Leone and Macedonia.

Source: Bloomberg