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“Think about the optics to the [Government of Guinea]“

Citation:Mining Weekly Date:2016-11-11 12:22:17


Emails from 2011 relating Rio Tinto's (LN:RIO) suspension of global iron ore chief Alan Davies have come out.

Rio announced the suspension of Davies and the earlier-than-planned retirement of Debra Valentine this week, and said it was investigating payments to a consultant helping to smooth relations with the Guinean president Alpha Condé. 

Now the Australian Financial Review has released an email chain between then-CEO Tom Albanese, then-iron ore and Australia boss Sam Walsh and Davies talking about whether to pay Francois de Combret US$10.5 million to secure blocks three and four of the Simandou project two years after losing one and two. 

"No question that (de Combret) delivered sizeable value, but also no question that there is still sizeable risk going forward. I wonder if the answer is to hold part of the funds in an account in his name, but subject to first shipment," Walsh wrote to Albanese on May 10, 2011. 

Davies made his case to Walsh that same day. 

"We have reached a final point, where Francois has requested a fee for services on securing 3 and 4 of US$10.5m. This is clearly stated as his bottom line, and a reduction from his request of US$15m," he wrote. 

"Sam, I accept that this is a lot of money, but I also put forward that the result we achieved was significantly improved by Francois’ contribution and his very unique and unreplaceable (sic) services and closeness to the President." 

Later that day, Albanese approves of the plan with the money held in escrow until shipments are made:

"Worth giving this a try, but also think about optics to the [government of Guineau]. Regards, Tom."  

The conversation came days after a $700 million payment to Guinea over a dispute about blocks three and four. 

Rio announced last month it had sold its stake in Simandou to former partner Chinalco, after mothballing the project mid-year. 


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