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DRC mine review enters new phase
Allan Seccombe
Posted: Mon, 18 Feb 2008
[miningmx.com] -- THE mines ministry in the Democratic Republic of Congo says it has made available to 60 companies operating in that country the Summary Findings into a review of their mining contracts there, something which has caused investor unease since it was unveiled last year.
The process has taken a lot longer than the market had initially been led to believe by the government, which said it would be completed by the end of 2007.
Deputy Mines Minister Victor Kasongo said the process was a lot more difficult and complicated than the government had expected it to be and none of the contracts it inherited after it came into power via democratic elections last year were flawless.
The contracts are divided into three categories, with ‘A’ being those contracts that need no changes, ‘B’ being flawed but could be rectified and ‘C’ being fatally flawed. None of the
contracts fell into the ‘A’ classification.
Kasongo also promised to speed up the process and bring some clarity to the mining sector, which took fright after a leaked draft report from the Review Commission in November last year, which recommended about a third of the contracts be terminated.
“The government is pleased to have delivered on its promise to the mining companies by presenting them with the findings of its review ahead of schedule,” Kasongo said in a statement on Monday.
“The DRC's goal is to work with those parties who have demonstrated good faith and best practice in their investments in the DRC, and who have delivered on their commitments,” he said.
One of the companies involved in the DRC is South Africa’s diversified miner Metorex, which has the Ruashi project to treat tailings and resume opencast mining. It has also taken a 45% stake in Copper Resources Corporation (CRC), which is refurbishing mothballed mines in the DRC.
Needham quashed a rumour doing the rounds in Johannesburg that Metorex’s DRC assets fell into the ‘C’ category, citing feedback from ministerial level discussions as well as ambassadors that had Metorex in the upper levels of the ‘B’ category.
“We’ve not had a formal piece of paper as of yet,” Needham told Miningmx. “We don’t know what category we are in and we’d be very surprised (if
we were in ‘C’).”
Gecamines has a 20% free-carried stake in the Ruashi project. “That has significant value, so there’s nothing of particular concern to us, but we haven’t had a formal response yet.”
First Quantum is also dealing with a difficult situation in the Democratic Republic of Congo, where the government is reviewing 60 mining licences. A leaked draft report recommended a number of the licences be terminated. First Quantum’s Kolwezi tailings treatment project was one of these.
“We are engaging the DRC government a lot over these things and we hope they will be resolved in coming months,” Newall said.
First Quantum is positive it will be permitted to continue its project because both its partners, the World Bank and South Africa’s Industrial Development Corporation (IDC) both conducted two-year-long due diligences and found nothing wrong, he said.
First Quantum, which had its Kolwezi tailings treatment classified as a ‘C’ under
the draft review, is hopeful it will be able to resolve the matter amicably with the DRC government.
First Quantum is positive it will be permitted to continue its project because both its partners, the World Bank and South Africa’s Industrial Development Corporation (IDC) both conducted two-year-long due diligences and found nothing wrong, Clive Newall, First Quantum’s president told Miningmx recently.
Kasongo said earlier this month the DRC government was setting up a panel to hear appeals for re-classification to reduce confrontation between companies and the state and to fast-track renegotiations of contracts.
Passing over the same ground in Monday’s statement, Kasongo said companies should “enter into the process with open minds and positive expectations, so that matters can be concluded promptly and effectively and with the least possible impact on operations and revenues.”
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