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BSG

BSG
Based in Guernsey, London, Geneva, South Africa
Active in Guinea, Romania, Israel, India, Belgium, Zambia, DR Congo, Namibia, South Africa, Azerbaijan, Balkans, Saudi Arabia, Russia, Mozambique
Targeted base metals, precious metals

BSG - the Beny Steinmetz Group - is one of the most important global investors in base and precious metals, especially diamonds.

According to Kenneth Gooding of the Mining Journal in 2011: "All of BSG's assets are owned by a foundation which means Mr Steinmetz himself technically does not control the group" - nor is he a director in any BSG company [MJ 3 June 2011]. There is no question, however, of the direct "advisory" role that Steinmetz has in BSG, nor his abilities as a deal-maker.

Beny Steinmetz himself is a diamentaire whose father, Ruben, founded the Steinmetz Diamond Group (SDG) in 1940, of which Beny is chairman. SDG has offices in almost all the major global diamond trading centres: Geneva, Antwerp, Tel-Aviv, New York, Chicago, Johannesburg, Bombay and Namibia.

SDG is a leading customer of the Diamond Trading Company (operated by De Beers) and its annual turnover in rough and large polished diamonds is believed to exceed US$ 1.5 billion.

BSGR (BSG Resources), the Group's resources arm, owns and operates ferro-nickel mines and plants in the Balkans; a steel mill in Azerbaijan; a diamond mine (Koidu Holdings) in Sierra Leone; copper-cobalt mines and smelting facilities in Zambia and in the DR Congo; and a phosphates’ operation in Saudi Arabia. It is also exploring for bauxite and uranium in Guinea [MJ 3 June 2011].BSGR is registered, and its management located, in the tax-avoidance island of Guernsey, which, as a UK Crown dependency, is nominally governed by the British monarchy, through its Privy Coundil.

Outside Africa, BSG's most controversial investment has been the 9% shareholding it has in Gabriel Resources Ltd, a Canadian company which has been attempting to construct the Rosia Montana gold mine in Romania [MJ 26 February 2010] (See also: Allianz}. Its most ambitious recent undertaking is the Simandou iron-ore project in the West African state of Guinea, a major part of which (to the north)is claimed by Rio Tinto. In 2011, the post-junta Guinea government reached an agreed settlement with Rio Tinto for this section of the project [MJ 2 June, ibid].

In April 2010, BSGR concluded a multi-million joint venture agreement with Vale of Brazil, under which the world's largest iron ore miner and exporter acquired 51% of the rights to BSG's section of this vast prospect. In return, BSG was to receive US$2.5 billion, with an initial half billion dollars cash payment, from Vale. According to Kenneth Gooding of the Mining Journal , Simandou "is widely considered to be about the best undeveloped iron-ore source in the world" [MJ 3 June 2011].

The Group is also the major shareholder of the London-based global engineering company, Bateman Engineering N.V, which specialises in minerals & metals processing, environmental treatment systems, and bulk materials handling [see:http://www.squidoo.com/benny_steinmetz_group].

Among Bateman's recent contracts are ones with Vedanta Resources (at its zinc operations in Rajasthan); Equinox Minerals' Lumwana copper mine in Zambia - taken over by Barrick Gold in early 2011; and LSE-listed, Ireland-based, Kenmare Resources at its Moma mineral sands mine in Mozambique.

On 8 October 2010, floods coursed through a settling pond at Kenmare's Mozambique operations, drowning a four-year old girl [Mines and Communities, 18 October 2010]. The mine had been constructed by a joint venture between Bateman and Australia's Multiplex construction group.

In summer 2007, BSG established a partnership with Da Vinci Capital, whose hedge fund focuses on Russian investment, including that in minerals. Da Vinci's hands-on involvement in mining is currently not known. However, in December 2010, Andover Ventures Inc - a Toronto-listed company with a large polymetallic prospect in Alaska - announced the appointment to its board of senior analyst, Mark Bloom, who is a current director of several Da Vinci funds [Andover Ventures announcement, 10 December 2010].

In March 2012, BSG's privately-owned Sierra Leonean diamond miner, Koidu Holdings, announced it was "studying a possible flotation" (IPO) on the Hong Kong Stock Exchange. The proceeds would go towards developing the Tongo diamond concession, south of the Koidu project itself [Reuters 9 March 2012].

Koidu already has a $200-million expansion plan in hand, for which Standard Chartered has provided $135-million.

In addition, the US jeweler Tiffany & Co, which buys around 60% of Koidu's output, is said to be contributing further funding, after already sending Koidu $50-million to help expand production at the mine [Reuters ibid].

November 2012 saw the government of Guinea accusing BSG "of lavishing gifts on former officials and flying-in cash to win rights over one of the world's biggest iron ore deposits." The charges came in a report, put together by a government technical committee, following an investigation and interviews with several officials of the former administration as well as former BSGR staff in Guinea.

"During the period of the military regime in Guinea from 2009 to 2010, BSGR was engaged in a strategy to improve its relations with decision-makers by making regular payments to high military figures," said the report, adding: "These payments were often distributed in cash, carried into the country in BSGR's private jet.

BSG dismissed the accusations as "laughable", claiming the government was attempting to seize assets it had planned to mine, after its April 2010 U$10 billion joint venture with Vale.

Guinea asked BSG Resources and its partners to respond to the accusations in the report. If the responses were not satisfactory, it "could put their permits at risk" [Reuters 5 November 2012].

By mid-2013, accusations of malfeasance by BSG and its associates in Guinea increased. In July 2013, A US judge denied bail to Frederic Cilins, a French citizen "with ties to BSG", who has been accused of interfering with a U.S. grand jury probe into claims that BSGR paid bribes to win mining rights in Guinea [Bloomberg, 4 July 2013].

Cilins is charged with offering money to Mamadie Toure, whom prosecutors ddescribe as the fourth wife of Guinea’s late President Lansana Conte, so that she would "lie to U.S. investigators about the alleged bribery scheme and to give him original contracts sought by the grand jury so he could destroy them". For his part, Cilins claims the contracts are "fake" and that he met with Toure to try to prevent her from extorting money from him and BSGR [Bloomberg ibid].

In turn, a spokesman for Steinmetz said that Beny "denies any knowledge of wrongdoing in relation to any ongoing FBI investigations...Mr. Steinmetz has an impeccable reputation and has faced no evidenced allegations anywhere” [Bloomberg ibid].

The New Yorker correspondent, Patrik Radden Keefe in July 2013 published a detailed expose of this "case", entitled "Buried Secrets: How an Israeli billionaire wrested control of one of Africa’s biggest prizes". [New Yorker, 8 July 2013. See: http://www.newyorker.com/reporting/2013/07/08/130708fa_fact_keefe?currentPage=1].


In early September 2013, the UK Serious Fraud Office joined the FBI and Guernsey's Financial Investigation Unit, to establish "whether the [Guinea] mining deal involved any breach of the Foreign Corrupt Practices Act and anti-money laundering laws"[Guardian 4 September 2013].

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