By Paul Kiernan
RIO DE JANEIRO--Brazilian mining giant Vale SA said Friday it
may consider an out-of-court settlement to a massive lawsuit in
which it has been accused of "stealing" a West African mine from
rival Rio Tinto PLC.
The lawsuit alleges that Vale and a former partner, Israeli
billionaire Beny Steinmetz, worked together to "misappropriate" Rio
Tinto's rights to the Simandou iron-ore deposit through corruption.
In it, plaintiff Rio Tinto says Mr. Steinmetz's company, BSG
Resources, bribed officials in the Guinean government to revoke
half of its Simandou concession and then partnered with Vale, which
"knew or should have known" about the payments. Mr. Steinmetz and
BSG Resources are also named as defendants in the suit.
The lawsuit pits two of the world's biggest mining companies
against each other in an uncommonly public battle and involves one
of the mining industry's most tantalizing prizes: a large and
virtually untapped lode of high-quality iron ore. Rio Tinto says it
lost billions of dollars in assets and investments made before its
Simandou rights were revoked, and claims it is entitled to "treble"
damages.
Clovis Torres, Vale's general counsel, said Friday his company
might be willing to settle the lawsuit, but "never as an acceptance
of guilt."
"What may be even more absurd than this lawsuit is the high cost
of legal processes in the U.S.," Mr. Torres said in an event
broadcast from London. "So to avoid the additional absurdity of
incurring even more costs, we could without a doubt think of
something along those lines."
Representatives for Mr. Steinmetz didn't immediately respond to
a request for comment.
A potential settlement isn't "on the table" yet, since Vale is
currently awaiting a U.S. judge's decision on where the case should
be tried. Rio Tinto filed the lawsuit in New York, while Vale
argues the dispute should go to arbitration in London.
"They need to rule on that point before continuing ahead to the
discovery process," Mr. Torres said.
The lawsuit was filed in April, weeks after a Guinean government
investigation concluded that Mr. Steinmetz's BSG Resources had
obtained rights to Simandou by improper means. As a consequence of
the investigation, Guinea revoked the concession from BSG Resources
and Vale.
BSG Resources has denied wrongdoing and filed an arbitration
request in a bid to win compensation from Guinea for stripping it
of its rights. Mr. Steinmetz has previously called the Guinean
probe's findings a smear campaign against him.
Rio Tinto declined to comment on Friday. In the lawsuit, it said
BSG Resources paid a $200 million bribe to Guinea's former minister
of mines in 2010, shortly after receiving a $500 million upfront
payment from Vale in exchange for a 51% stake in its Simandou
joint-venture with BSG Resources.
The former minister of mines, Mahmoud Thiam, is also a defendant
in the lawsuit. He said Rio Tinto has been "spreading lies" about
him for years and that he is "very, very happy" to continue
battling the company in court to set the record straight.
"I'm not in a settling mood," Mr. Thiam said. "I'll exact my
pound of flesh before this process ends."
Vale had previously been in talks with Rio Tinto to buy some of
the Simandou assets, gaining confidential information about how to
develop the mine in the process, the lawsuit alleges. This "double
dealing" ultimately allowed the Brazilian firm to acquire an
interest "on the cheap" from BSG Resources, which had no prior
experience in iron-ore mining, according to the lawsuit.
In April, Vale said it condemned the use of "corrupt practices"
and noted that the Guinean government probe found no involvement in
"fraudulent conduct" on its part.
Write to Paul Kiernan at paul.kiernan@wsj.com
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