BSG

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: "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, or 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) is the Group's resources arm, which 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].

Outside of 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].

It's 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 got 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 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 focusses on Russian investment, including 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, to 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 in expanding 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 to one of the world's biggest iron ore deposits." The charges came in a report which followed 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", saying 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, put together by a government technical committee. If the responses were not satisfactory, it "could put their permits at risk" [Reuters 5 November 2012].