Mining and Heavy Industries

Mozambique probe adds to Rio’s African issues

Rio Tinto was reportedly already the subject of a separate investigation by the US Securities and Exchange Commission when it contacted international officials over a 2011 payment relating to the Simandou iron ore project in Guinea.

The US investigation, originally revealed by Fairfax and later reported by Bloomberg, appears to be a separate issue to Simandou.

The SEC is said to be investigating the US$3 billion impairment taken by Rio on its Mozambique coal project in 2013, just under two years after it acquired the project for US$4.2 billion from Brisbane-based operator Riversdale.

The mega miner wrote-off much of the project’s value and later sold the asset for just US$50 million, during the global mining downturn, which saw Rio take a total of US$14 billion in asset writedowns, and the end of chief executive Tom Albanese’s tenure at the company.

An investigation into Mozambique dealings by the SEC only adds to Rio’s issues in Africa.

Three weeks ago the company contacted US, UK and Australian officials over an internal investigation into a US$10.5 million payment made to a French businessman who was assisting with negotiations with Guinean President Alpha Condé.

Rio sacked its Energy & Minerals chief executive Alan Davies and Legal & Regulatory Affairs group executive Debra Valentine after announcing the investigation, which questions the legality of the payment in the lead up to Rio winning a share of the rights to develop the potentially massive Simandou iron ore project.

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