April 24, 2019

Brazilian mining company seeks to enforce an arbitration award in excess of $1.2 billion in connection with lost mining concessions

Vale S.A., a Brazilian mining company, has filed a petition for recognition and enforcement of a foreign arbitration award against BSG Resources Limited in the United States District Court for the Southern District of New York.  According to Vale’s statement of facts, Vale and BSG entered into a joint venture in April 2010 to develop iron ore mining concessions in Guinea.  BSG had acquired rights to certain mining concessions from the government of Guinea in December 2008, during the administration of President Lansana Conté, shortly before his death.  

Pursuant to the joint venture agreement, Vale stated that it paid $500 million to BSG and later invested approximately $750 million to develop the concessions.  A subsequent government investigation concluded that BSG had paid bribes to obtain the concessions, leading to their revocation in April 2014.  Vale sought to recover its investment through arbitration, and on April 4, 2019, the London Court of International Arbitration granted Vale the award that it now seeks to enforce in New York.  

Investigations have arisen out of these concessions:

  • The Conté government had revoked concessions to the Rio Tinto Group before granting them to BSG.  In 2011, a successor government gave certain rights back to Rio Tinto.  In 2016, Rio Tinto disclosed over $10 million in potential bribe payments to a consultant in Guinea.  This has been under investigation by US authorities.
  • In April 2013, the FBI arrested Frederic Cilins, a representative of BSG, in a sting operation using a cooperating witness.  Cilins pleaded guilty to obstructing a federal criminal investigation, and in July 2014 was sentenced to 24 months in prison.

Petition | Memorandum of Law