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UPDATE:Congo Govt Says Most Mining Cos To Stay Long Term

6 November 2007

Source:Dow Jones International News
By Jeffrey Sparshott

LONDON (Dow Jones)--Congo's Ministry of Mines Tuesday called a leaked early draft of the country's mining review commission "grossly misleading," and said most companies would remain in the country for the long term.

The leaked report, which appeared over the weekend, indicated that a commission reviewing mining licenses would recommend 23 contracts be canceled entirely and another 38 contracts be amended.

While companies remained in the dark, the news rattled investors and sent share prices of some miners sharply lower.

Congo's mining minister Tuesday called the information speculative and said it was not based on any official document.

"The review process has been damaged by this grossly misleading leak of information, but the DRC (Democratic Republic of Congo) remains determined to manage the license review responsibly and to the benefit of all responsible companies," Martin Kabwelula, the DRC's Minister of Mines, said in a statement.

"It is expected that, after all irregularities have been corrected, the great majority of companies currently in the DRC will remain in the country for the long term," he said. "This has been and will remain the position of the government."

Congo is in the process of reviewing more than 60 mining licenses signed during the 1998-2003 civil war and the subsequent transitional government.

The official government statement, released via a London public relations agency, follows the leaked weekend report that appeared on a Kinshasa-based newspaper's Web site. That report indicated the commission would recommend 38 contracts be amended and 23 contracts be canceled entirely.

The leaked report said First Quantum Minerals (FM.T) and Anvil Mining (AVM.T) have projects among the cancelations, while Nikanor PLC (NKR.LN), Katanga Mining Ltd. (KAT.T), Lundin Mining (LUN.T) and AngloGold Ashanti (AU) would face amendments to their contracts.

The report hit share prices. First Quantum shares Monday closed down 10.4%, or 512 pence, to 4,410 pence.

At 0955 GMT, First Quantum was up 6.6%, or 290 pence, at 4,700 pence in London, leading a broadly stronger mining sector.

The government says the review will ensure companies are complying with the country's mining law, that they are paying enough in taxes and royalties to the government, and that the companies are actually developing mines rather than just holding the valuable rights.

The process has been criticized for its lack of transparency and clarity.

At stake are some of the world's largest copper resources - as recently as 1989 Congo was the world's fifth-biggest copper producer. The country also is home to vast wealth in gold, diamonds, tin, zinc and other metals and minerals.