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BSG's bankruptcy may derail Vale's US$2B award over Simandou iron ore project

BSG Resources Ltd. filed for bankruptcy protection in the U.S., a move that may hinder Vale SA from collecting a US$2 billion arbitration award over fraudulent misrepresentations BSG made related to Vale's purchase of a stake in the Simandou iron ore project in Guinea, Bloomberg News reported June 5.

In a Chapter 15 filing in a Manhattan bankruptcy court, BSG listed a pending litigation against billionaire George Soros — in which the firm claimed Soros bankrolled a conspiracy to oust BSG from the Simandou operation and at least US$10 billion — as its only U.S. asset.

According to the newswire's report, the firm owned by Beny Steinmetz appealed the arbitration award in favor of the mining giant on procedural grounds, saying it was not treated fairly.

A London arbitration court in April ordered BSG to pay Vale US$1.25 billion after it was found liable for fraudulent misrepresentations when it allegedly induced the latter to acquire a 51% interest in the northern half of Simandou.

BSG entered into voluntary administration in March 2018 in the U.K., part of pre-emptive measures to protect itself against the arbitration award. Administrators appointed to the firm are seeking for a restraining order on Vale's pursuit award from a U.S. court in order to bring BSG out of administration first.

The Guinea government revoked BSG's project rights due to corruption surrounding the deal to acquire the rights.

In February, BSG abandoned the Simandou project, as part of a settlement with the West African nation, with both sides agreeing to withdraw outstanding actions related to a dispute over Simandou.