Swiss police last week raided the Geneva offices of a company linked to Steinmetz following a request by the U.S. Justice Department and Guinea's government regarding allegations of bribery involving the wife of Guinea's late dictator, Lansana Conte.
The former army general ruled the former French colony for 24 years until his death in 2008.
The West African state has abundant deposits of iron ore, bauxite, diamonds, gold and aluminum ore, but its 11 million people live in squalor, without clean water, electricity, schools or infrastructure.
Some estimates suggest the Simandou ore could generate around $140 billion over 25 years, more than doubling Guinea's gross domestic product.
Also last week, French police raided the home of a director of Beny Steinmetz Group Resources, the mining arm of the tycoon's business empire, registered in the British-ruled Channel Islands, an offshore tax haven.
Scotland Yard's Serious Fraud Squad and the Financial Investigation Unit on Guernsey, one of the Channel Islands that lie off France, began an investigation Wednesday, at the request of authorities in Guinea, into how Steinmetz acquired rights to extract half the ore in Simandou Mountain in remote southeastern Guinea.
Steinmetz had repeatedly denied any wrongdoing.
BSGR secured the rights in the final days of Conte's dictatorship in 2008, after Conte had stripped them from Rio Tinto, the Anglo-Australian mining conglomerate that had acquired them in the 1990s.
When Guinea's first democratic government was elected in December 2010, the new president, Alpha Conde, a French-educated law professor, ordered an investigation of allegations of graft concerning BSGR's acquisition of the Simandou mining rights.
It gathered testimony from former business associates of BSGR and others of luxury gifts and payments to Conte's relatives.
Among the allegations was a claim that a BSGR official offered Conte a diamond-studded gold watch and that the company agreed to pay the president's fourth wife, Mamadie Toure, a commission of $2.5 million for helping swing the Simandou deal.
She has denied that but it widely known that while Conte was in power, mineral prospectors invariably lavished gifts or bribes on his four wives to gain favor, par for the course in Africa where corruption at all levels is rife.
Conte is reported to have signed papers handing Simandou to Steinmetz's group while on his deathbed.
Steinmetz, who had made his fortune dealing in African diamonds, pledged to invest $165 million to develop the iron mine, one of Africa's richest untapped mineral deposits.
In April 2010, he sold 51 percent of the BSGR stake for $2.5 billion to the Vale company of Brazil, the world's biggest iron more miner, making a huge profit on his investment.
Veterans of the buccaneering world of African mining were astounded. One was quoted in the financial press as saying Steinmetz had "hit the jackpot."
African telecom billionaire Mo Ibrahim declared: "Are the Guineans who did that deal idiots or criminals? Or both?"
Conde's government pledged to produce a mining code to combat corruption and regulate an industry that could drag the country out of its poverty.
The Guinea government hired U.S. lawyers and investigators experienced in probing corruption and money laundering.
The FBI was persuaded in January to check the Simandou deal to determine whether any U.S. laws had been violated.
Federal agents arrested a Frenchman named Frederic Cilins, a Steinmetz associate, in Jacksonville, Fla., April 14 on charges of tampering with a witness, obstructing a criminal investigation and destroying, altering or falsifying records in a federal investigation.
It transpired that in March, Cilins, 50, had contacted Conte's widow, Mamadie Toure, at her new home in Jacksonville. She had already been approached by the FBI and agreed to cooperate in their investigation.
Her phone was tapped and she wore a wire at three meetings in Florida with the Frenchman, who, his indictment states, subsequently offered her $5 million to "urgently, urgently" destroy documents linked to the Simandou deal.
Steinmetz has vigorously denied any U.S. wrongdoing but the Conakry government continues to press its criminal investigation.