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Thursday, May 23, 2024 | Back issues
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Rio Tinto Loses Bid to Get Back Billion-Dollar Mine

(CN) - A federal judge has thrown out Rio Tinto's lawsuit claiming Brazilian mining giant Vale S.A. and an Israeli diamond magnate conspired to steal an iron ore reserve in southeast Guinea potentially worth billions.

In a complaint filed in Manhattan Federal Court in May 2014, Rio Tinto, a British-Australian mining corporation based in London, claimed it spent 11 years and hundreds of millions of dollars developing its mining concession in the Simandou region of Guinea.

But when it came time to grant a license to mine of what may be the most valuable untapped reserve of iron ore in the world, the Guinean government grated it not to Rio Tinto, but to defendant Beny Steinmetz's BSG Resources, which then sold 51 percent of the mine to Vale for $2.5 billion, the lawsuit said.

On February 6, 2015, Vale, Steinmetz, former Guinean Mining Minister Mahmoud Thiam and the other defendants named in the complaint moved for its dismissal on the grounds that the RICO claims on which it is based are time barred and that Rio Tinto failed to plead a "pattern of racketeering activity."

Specifically, the defendants argued that the RICO injury allegedly suffered by Rio Tinto -- the loss of the mining rights to Simandou Blocks 1 and 2 -- occurred on Dec. 9 2008, when the decision of the Guinean government was announced, and that the statute of limitations for the alleged activities ran out in December 2012 -- 16 months before the original complaint was filed.

The defendants also argued that Rio Tino could not rely upon tolling the statute of limitations because, among other things, "a plaintiff who is not reasonably diligent may not assert fraudulent concealment."

Rio Tinto filed its opposition to the motion for dismissal on March 6, 2015, claiming the defendants had the timeline wrong, and that the injuries it suffered occurred in 2010, when Vale publicly announced its joint venture with Steinmetz's firm.

It then claimed to have suffered an additional injury, in April 2010, "when Defendants' extensive campaign of bribery and threats to Rio Tinto's remaining mining rights to Simandou Blocks 3 and 4 left Rio Tinto with no alternative but to relinquish its claims to Blocks 1 and 2 as part of a settlement with the Guinean Government."

On review, U.S. District Judge Richard Berman said Rio Tinto appeared to assert a different dates of injury at different points in the litigation, ranging from December 9, 2008 to April 30, 2010.

"The Court finds that the Complaint establishes unequivocally that Plaintiff sustained its RICO injury on December 9, 2008, when the Guinean Government notified Rio Tinto in writing that Rio Tinto's mining rights to Simandou Blocks 1 and 2 had been rescinded," Berman wrote.

Further, he said, "Plaintiff had sustained a 'definite and provable' injury by December 11, 2008, when the Guinean Government publicly announced that it was awarding Simandou Blocks 1 and 2 to Defendant BSGR."

Berman said the court was unconvinced by Rio Tinto's arguments that the injury occurred later, and also concluded that the mining company knew of its injury on the earlier date.

He then cited the Western District of New York's 2012 ruling in Woods v. Mercier, in which the court held that "The statute of limitations begins to run on the date that the plaintiff learned of his or her injury, not the date that the plaintiff learned that his or her injury may have resulted from racketeering activity."

"Because Plaintiff was on notice of its injury by December 9, 2008, more than five years and four months before its April 30, 2014, original complaint was filed, Plaintiff's claim is outside the four-year civil RICO statute of limitations and is, therefore, time-barred," Berman wrote.

Berman then went on to hold that Rio Tinto "failed to demonstrate that it exercised due diligence in pursuing discovery of its claim during the period it seeks to have tolled ... from December 9, 2008 to April 30, 2010."

And he also concluded the defendants' alleged concealment of their purported scheming did not prevent Rio Tino's discovery of the nature of its claim.

As a result, Berman said, "the Court need not determine whether Plaintiff adequately pled active concealment by the Defendants."

Lastly, Berman held that another of Rio Tinto's claims -- that the RICO scheme was "open-ended," and therefore ongoing when it filed its complaint, simply didn't hold water.

"Plaintiff cannot plead open-ended continuity because there is 'no threat of continuity where [the] alleged purpose of [a] fraudulent scheme was essentially accomplished."

"Plaintiff's argument that 'Defendants' goal was not merely obtaining Simandou [Blocks 1 and 2] but thwarting Rio Tinto's efforts to reclaim [Blocks 1 and 2] and profitably mining and earning income from it,' is not persuasive," Berman wrote.

In light of these conclusions, Berman held Rio Tinto's underlying RICO and state claims must fail.

In a footnote, he added, "Any issues raised by the parties not specifically addressed herein were considered by the Court on the merits and rejected. The Court is not here ruling upon the alternate merits of either parties' claims."

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