Capitalizing on competing property titles in the Simandou iron ore reserves in Guinea:investor-state arbitration vs host-stranger relations

Simandou mountain chain in Guinea contains the biggest unexploited high-quality iron ore reserves in the world. The French colonial regime, Soviet Union, Mitsubishi, Rio Tinto, Chinalco, Vale, Beny Steinmetz Group (BSGR) and Société Minière de Boké have all successively explored and planned to exploit it. However, no iron has been mined to date. The inhabitants of the Simandou mountain chain have been hoping that the construction of the mine would bring jobs and modern amenities, just as the Guinean government had been expecting the mine to bring tax revenue and economic development. Even if not dug, the projected mine has, however, allowed investors to capitalize on the mining prospects, and so largely thanks to guarantees offered by investor-state arbitration. In 2007, Rio Tinto fended off a US$142bn hostile takeover by BHP Billiton by claiming Simandou to be undervalued in its books. In 2011, BSGR sold its rights to half of the reserve to Vale for US$2.5bn and once the Guinean government had revoked its concession based on corruption charges, the company simply sued the country in investment arbitration. At the same time, Simandou inhabitants’ attempts to leverage their position as local landlords to get the mine to open and bring them tribute failed.  Based on ethnography in Guinea and France and analysis of submissions in the various litigations and arbitrations to which this saga has given rise, this presentation shows how different parties’ ability to extract financial value in the present from a mine still to be built in the future remains conditioned by the scalar strength of their respective property titles.