Mining and Heavy Industries

Rio executive suspended after Simandou payment revealed

Rio Tinto has suspended its energy and minerals chief executive Alan Davies, and is in talks with officials in multiple jurisdictions over a $13.5 million payment relating to the Simandou iron ore project in 2011.

Rio told the ASX on November 9 that on August 29, 2016 it became aware of email correspondence from 2011 “relating to contractual payments totalling US$10.5 million made to a consultant providing advisory services on the Simandou project in Guinea”.

The miner launched an investigation into the matter, led by external counsel.

“Based on the investigation to date, Rio Tinto has today notified the relevant authorities in the United Kingdom and United States and is in the process of contacting the Australian authorities,” the company said on Wednesday.

“Energy & Minerals chief executive Alan Davies, who had accountability for the Simandou project in 2011, has been suspended with immediate effect.”

Debra Valentine, Rio’s legal and regulatory affairs group executive, has also stepped down from her role; Valentine had previously announced her intention to retire on May 1, 2017.

“Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities. Further comment at this time is therefore not appropriate.”

Rio signed a significant deal with the Government of Guinea in 2011 to secure the mining title for Simandou, and to create a mine and export project to make its first shipment by mid-2015.

Iron ore operations are yet to begin at Simandou, however, and Rio last month announced it was selling its stake in the project to Chinese miner Chinalco for around US$1.3 billion.

The Simandou mine, which Rio believes could access more than 2 billion tonnes of iron ore, is in the Nzérékoré Region in southern Guinea. The project would require a 650 kilometre railway to transport iron ore to the coast for export.

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