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MIGA seeks $500m DRC 'confidence vote' Posted: Thu, 07 Sep 2006 [miningmx.com] -- MIGA, the arm of the World Bank that provides political risk insurance to private sector companies operating in third world countries, is looking at a huge increase in its exposure to the Democratic Republic of Congo (DRC). Addressing the Africa Downunder Conference in Perth, Western Australia, MIGA executive Nick Halkas said the organisation’s only exposure the DRC at present was through a $20.8m guarantee to Anvil Mining and its Dikilushi copper mine. But Halkas, who is MIGA’s global head for oil & gas, mining and chemicals, told delegates this figure could rise to around $500m within three years because of the number of projects likely to come on stream in the DRC. Halkas said that investors getting insurance on projects through MIGA were actually buying deterrence and mediation services. “Since we were created in 1988, we have only had to pay out three claims which were in Indonesia, Nepal and Venezuela. That’s despite issuing a total of $1.4bn in guarantees to the mining sector over this time. Our current mining portfolio stands at $400m,” he said. Halkas said MIGA’s unique strength was its ability to resolve pre-claim situations to the satisfaction of the investor which is why it had only had to settle the three claims referred to. “Once a company starts to have problems they come to us and we immediately start discussions and negotiations with the host government. In many cases the bottom-line problem involves a misunderstanding of the rights granted to foreign investors.” Said Halkas: “The contracts signed need to reflect clearly the understanding of the rights that have been granted. Tariff formulas should be specified, the appeal process should be clarified and specified exit payments should be agreed in the event no agreement can be reached." The types of political risk insurances offered by MIGA cover currency transfer restrictions and inconvertibility; war and civil disturbances; expropriation and breach of contract. Recent developments in South America were an example of expropriation risks, he said. “Who would have believed just eight years or so ago that this could happen in South America?Free news alerts: click here to subscribe
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