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Glimmer of hope for Kumba’s Kipushi
David McKay
Posted: Wed, 13 Sep 2006

[miningmx.com] -- KUMBA Resources, the South African diversified mining firm, has met with the Democratic Republic of Congo’s (DRC’s) mines minister, Ingele Ifoto, at the weekend in an effort to resolve a dispute over development rights to the Kipushi base metals project.

This was after state-owned base metals company, Gecamines, issued a request for tenders for the project. Kumba and its partner, First Quantum Minerals, said they had agreements with the DRC’s government to reopen the mine, located near the Zambian border.

Kipushi is estimated to have a measured and indicated resource of 16.9 million tons with an average grade of 16.7% zinc and 2.2% copper. Zinc and copper were produced profitably at the Kipushi mine from 1925 until 1993.

“We did engage with the minister of mines on Saturday (September 9) over our dissatisfaction with Gecamines,” said Douglas Taylor, GM of strategy and business development at Kumba. “We believe we had a productive meeting.”

“The parties have engaged again on Monday (September 11). We’re hoping the relevant parties will be able to sit around the same table,” he said. “We have a dispute resolution mechanism in our agreement which we can’t disclose,” he said.

Taylor said that if Kumba and First Quantum Minerals could not agree with Gecamines, it would consider legal action against the DRC company. Kumba has also reserved its rights in a dispute which saw it lose its rights to a portion of the Kamoto underground copper mine, also in the DRC. Nikanor, a UK listed firm owned by diamond magnate, Beny Steinmetz, now has the rights to mine Kamoto.

It’s thought that at root to the Kipushi dispute, Gecamines has asked for a very large free-carry – an interest in the project without having to stump up financing – of between 35% and 50%. In statement placed in the press on September 11, Kumba and First Quantum Minerals said they had taken legal advice and considered Gecamines’ actions as a violation of their rights.
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One of the reasons Kipushi is important to Kumba is that a portion of production form the mine would help fill Kumba’s zinc smelter owned by Zincor. Zinc concentrate is currently in short supply owing to world demand for the metal. The price of zinc has gained 131% over the past 12 months and was last trading at $3,250/t in London.