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Fortin squares up to SA's Exxaro Posted: Mon, 19 Feb 2007 [miningmx.com] -- SO this is Paul Fortin, the 68-year-old attorney who has spent the past 12 months stirring the resources sector into a froth over mineral rights, security of tenure and other things of which mining industry nightmares are composed. As MD of Gecamines, the bankrupt, state-run mining firm of the Democratic Republic of Congo (DRC), he has had quite a lot to deal with, especially for someone who might be expected to retire to more sedentary things, such as books or a garden. But sitting in the bright Zambian sun, Fortin doesn't betray any of the stress. He is, in fact, relaxed and confesses to taking the job purely for "the challenge". Gecamines is a microcosm of the effects of civil war on society. The company had debt of $2.4bn (R17bn), was riddled with corrupt officials, and had no prospect of generating revenue as its assets rotted. There’s still a lot wrong with the company, said Fortin. The debt can’t be repaid and there needs to be important restructuring of mining development agreements between Gecamines and the industry. That’s given collywobbles to mining firms that have bet on the DRC’s regeneration – and some are South African. Take Exxaro Resources. It’s the company that recently lost its permit to mine the Kipushi zinc mine, a right it claims before the DRC’s newly elected democratic government was installed. Fortin said there’s no evidence that it or its joint venture partner – First Quantum Minerals, a company listed on the Toronto Stock Exchange – had an agreement. Said Fortin: “There was a letter of understanding with Adastra Minerals (which First Quantum Minerals subsequently bought) and Kumba Resources (the forerunner to Exxaro Resources). But in five years they did nothing.” "I asked them to present every piece of paper they had. They did that which we sent to our advisors. Legal advice was that there was no agreement. Then they sent us another box of papers and our legal advice was there was still no agreement they could develop the mine." “I have no personal feelings about that. If they have an agreement let them present it. But we have a strong case. We’ll see them in court.” That will be on 23 February, when a court in Belgium will hear the appeal brought by Exxaro and First Quantum. Both Exxaro Resources and First Quantum Minerals are silent on details of the legal case. Said Clive Newell, president of First Quantum Minerals: “We feel we have a strong case. There was a contract inherited from Gecamines and a number of conditions in it that were time-related.” He won’t say more. One potential argument First Quantum and Exxaro Resources may marshal is that it was impossible to develop the resource while bullets were flying over their heads. Meanwhile, the loss of Kipushi is another setback for Exxaro Resources in its attempt to develop an African mining strategy. However, Fortin said other changes are afoot. Agreements with DRC mining investments must change structurally. Said Fortin: “There was a lot of discussion at the national assembly in the last parliament on this. Something needs doing – so let’s just do it once.” What that will mean for existing and potential South African investors in the DRC is taking local managers into finance and operating sub-committees rather than “stranding” them on the main boards. That’s the DRC’s and Fortin’s particular version of real empowerment over fronting, as has been mooted in South Africa’s mining circles. Click Here to subscribe to our daily newsletter
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