Published: Thu, November 10, 2016
Economy | By Melissa Porter

Rio Tinto suspends senior executive over US$10.5M payment

Rio Tinto suspends senior executive over US$10.5M payment

Australian authorities are being contacted.

Rio had been forced to give up part of the Simandou deposit to BSG Resources, a company controlled by the Israeli investor Beny Steinmetz, who was later the subject of a United States investigation into whether he had made illegal payments to secure control of the acreage.

Global miner Rio Tinto has suspended one top executive with immediate effect while another is stepping down over payments made in 2011 related to the Simandou iron ore project in West Africa.

Its legal and regulatory affairs executive Debra Valentine, who was due to retire next May, has resigned.

Neither has been accused of wrongdoing.

Rio said it became aware of email correspondence from 2011 relating to the payments, and launched an investigation led by external counsel.

It expects to receive between $US1.1 billion ($A1.4 billion) and $US1.3 billion ($A1.6 billion).

One of Mr Jacques' first major decisions was to cancel development of the long-gestating $20bn Simandou project after deciding that low iron ore prices made the mine unviable.

In May 2014, the Guinea government and Rio Tinto (LON:RIO) and its partners - China's Chalco together with the World Bank - inked a landmark $20 billion deal for the southern section of the Simandou iron deposit in Guinea.

"Rio Tinto intends to cooperate fully with any subsequent inquiries from all of the relevant authorities", the company said. In 2008, Rio's rights to the northern half of the project were confiscated by the Guinean government and handed to BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz's business empire.

Britain's Serious Fraud Office said it had been notified about the payments, but declined to comment further.

Analysts at Investec said the announcement it was a "surprise" given that Mr Davies had been touted as a potential CEO prior to Mr Jacques' appointment. "Rather, this is a potentially negative public relations issue which Rio Tinto has managed to avoid whilst BHP has been dealing with the Samarco dam incident".

That message came just days after Rio said it would pay the government of Guinea $700 million to resolve an impasse over part of the project, known as blocks 3 and 4.

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