By Rhiannon Hoyle 

Rio Tinto PLC's firing of two top executives has shone a fresh spotlight on its probe into payments associated with a massive iron-ore deposit in Guinea.

Early Thursday in Australia, Rio Tinto said it had ended the contracts of energy and minerals chief executive Alan Davies and legal and regulatory affairs group executive Debra Valentine. The move came after Mr. Davies was suspended and Ms. Valentine stepped down last week.

Internal Rio Tinto emails, seen by The Wall Street Journal, showed that high-level executives at the company approved payments in 2011 to a consultant who was close to senior government officials in Guinea.

In a statement, Mr. Davies said there were "no grounds" for his termination and he had been given "no opportunity to answer any allegations."

Ms. Valentine couldn't be reached for comment.

The Anglo-Australian mining company said it has notified authorities in the U.K., U.S. and Australia.

The Australian Securities and Investments Commission wouldn't say Thursday whether it was looking into the matter, while the Australian Federal Police said it "has engaged with Rio Tinto in relation to this matter, however, the matter has not been formally referred to the AFP."

On Sunday, in a note to senior leaders, Rio Tinto CEO Jean-Sébastien Jacques acknowledged the miner was facing a challenging situation and said official investigations might take years.

Mining companies have been driven into new frontiers to chase the most valuable deposits of everything from iron ore to copper, or risk losing out on lucrative developments.

At Simandou, where Rio Tinto first secured exploration rights in the 1990s, plans for a mine were complicated by a lack of rail and port infrastructure. Plus, its development was bogged down by political upheaval, commodity-price volatility, contractual wrangling and legal issues that included a U.S. grand-jury investigation.

The company agreed last month to sell its stake in Simandou to Aluminum Corp. of China for $1.1 billion to $1.3 billion. Earlier this year, Rio had virtually written off Simandou, recording an impairment charge of $1.12 billion, citing uncertainty with securing funding for the project.

Appetite for iron-ore resources was big early last decade, as rapid industrialization in Asia, especially China and India, bolstered demand for steel.

Although a huge 7 investment was needed in the site--the plan included construction of a 400-mile railway from the mine to Guinea's Atlantic coast, as well as building a deep-water port to ship the ore abroad--miners from China to Europe, including Glencore PLC, at one time expressed an interest in investing.

BHP Billiton Ltd. previously held rights to iron-ore reserves in Guinea but sold out a few years ago. On Thursday, BHP Chief Executive Andrew Mackenzie denied walking away from Guinean iron ore because of political issues.

It "was an economic decision," he told reporters on the sidelines of a shareholder meeting in Brisbane, Australia. "It just didn't stack up versus increasing investment in Australia." He declined to comment on the situation facing rival Rio Tinto.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

 

(END) Dow Jones Newswires

November 17, 2016 11:57 ET (16:57 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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