SYDNEY?One Rio Tinto PLC executive stepped down while another was suspended as the miner alerted authorities to emails that reference US$10.5 million worth of payments made to a consultant on the troubled Simandou project in Guinea, one of the world's largest iron-ore deposits.
The Anglo-Australian mining company has since August been investigating the emails relating to Simandou, a project that has been bogged down by lawsuits and in which Rio Tinto last month sold its stake to Aluminum Corp. of China Ltd. for up to US$1.3 billion. It said on Wednesday it was notifying authorities in the U.K., U.S. and Australia.
Energy and Minerals Chief Executive Alan Davies, who was responsible for the Simandou project at that time, has been suspended.
Legal and Regulatory Affairs Group Executive Debra Valentine has stepped down. She had previously told the company she intended to leave Rio Tinto in May, 2017, the company said.
"On Aug. 29, Rio Tinto became aware of email correspondence from 2011 relating to contractual payments totaling US$10.5 million made to a consultant providing advisory services on the Simandou project in Guinea," the company said in a regulatory filing.
The miner became aware of the communications after an unspecified number of emails were published to an open internet forum, a spokesman said. The emails were posted for a short time before being removed, he said.
The Simandou site, which Rio Tinto began exploring in 1997, had been considered one of the mining world's most coveted prizes due to its size and high quality of iron ore. Rio Tinto said it could sustain a mine for more than four decades and possibly turn Guinea into one of the world's top exporters of the steelmaking commodity.
The US$20-billion project became engulfed in controversy, however, after the government of now-deceased dictator Lansana Conté in 2008 stripped Rio Tinto of two of the project's four blocks on grounds that the miner had failed to develop the project in a timely manner. The government awarded the rights to BSG Resources Ltd., the mining business of Israeli billionaire Beny Steinmetz, which later struck a deal with Brazil's Vale SA to buy a 51% stake in the Simandou assets.
The Guinea government later stripped BSGR and Vale of those rights, alleging they were illegally obtained.
"Rio Tinto intends to cooperate fully with any subsequent inquiries from all of the relevant authorities," the company said.
It is notifying the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the U.K.'s Serious Fraud Office and the Australian Securities and Investments Commission.
The miner said it wouldn't comment further. Efforts to reach Mr. Davies and Ms. Valentine weren't successful.
"Given the scale of Rio Tinto, it would appear unlikely that this development would have a material impact from a monetary perspective, though we will have to see if anything eventuates from this in the future," said RBC CapitalMarkets analyst Paul Hissey. "Rather, this is a potentially negative public relations issue which Rio Tinto has managed to avoid whilst BHP Billiton Ltd. has been dealing with the Samarco dam incident."
Rio Tinto shares didn't react. Its stock traded up 1% in Sydney on Wednesday, versus a 0.8% rise in the S&P/ASX 200.
Write to Rhiannon Hoyle at email@example.com
(END) Dow Jones Newswires
November 08, 2016 20:45 ET (01:45 GMT)
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