News: UPDATE 3-Rio Tinto fires two top executives over Guinea payments

• Energy and minerals chief Davies sacked
• Davies says will sue company
• Legal and regulatory head axed, despite upcoming retirement
• Unvested bonus awards from previous years will not be paid

(Adds Davies statement)

SYDNEY, Nov 17 (Reuters) - Rio Tinto (RIO) has axed two of its top 10 executives amid an investigation over around $10 million in payments to a consultant who helped it secure rights to develop the world's largest untapped iron ore reserves in Guinea.

The mining giant said on Thursday it had terminated the contracts of Energy and Minerals chief executive Alan Davies and Legal and Regulatory Affairs Group executive Debra Valentine after reviewing the findings to date of an internal investigation into 2011 contractual arrangements with the advisor.

Davies, with Rio Tinto for nearly 20 years, said there were no grounds for his termination and that he would take legal action.

"I have not been privy to Rio Tinto's internal investigation report, nor have I had any evidence of the reasons for my termination of my employment given," he said in an emailed statement.

"My rights are fully reserved, and I have been left with no option but to take the strongest possible legal action in response."

Valentine could not immediately be reached for comment. The scandal at the world's second largest miner erupted last week after Rio Tinto said it had become aware of emails from 2011 that referred to payments to a consultant providing advisory services on its Simandou project in the West African nation of Guinea.

It follows Rio's announcement last month that it had agreed to sell its 46.6 percent stake in Simandou to state-owned Chinese metals producer Chinalco <3668.HK>, and has raised worries that the project could falter.

Rio's board concluded that Davies, who was in charge of the Simandou project at the time, and Valentine had failed to maintain the standards expected of them under its global code of conduct, though the decision did not pre-judge the course of any external inquiry into the matter, the company said in a statement.

It alerted U.S., UK and Australian regulators about the payments last week. Chief Executive Jean-Sebastien Jacques said in an internal email that staff were "shell-shocked" by the discovery and any investigations could take several years.

The leaked emails showed then-chief executive Tom Albanese, then-iron ore boss Sam Walsh, and Davies discussed a $10.5 million payment to Francois de Combret, a former Lazard investment banker with a long history operating in Guinea.

Albanese was replaced by Walsh in 2013, and Walsh retired in July. Albanese, now chief executive of Vedanta Resources , declined to comment on the situation last week, when asked about it on a Vedanta earnings call.

"This treatment of me and my past and recent colleagues is totally at variance with the values and behaviours of the company to which I have devoted my professional life," Davies said in his statement.

Davies will be replaced by Bold Baatar, who will join the Executive Committee as Energy & Minerals chief executive. Baatar had been serving as the managing director of marine and vice president of Iron Ore Sales and Marketing.

Chief Financial Officer Chris Lynch has temporarily stepped in to run the legal and regulatory affairs function while the company looks for a new chief legal counsel.

A Rio Tinto spokesman was not immediately available to comment on what had been found between last week and now to result in Davies and Valentine being fired. Valentine had been due to retire in 2017 and had already stepped down.

The company said they would not be paid any bonus for 2016 and it would cancel all their unvested awards from previous years.