Avima Iron case: Congo defends itself
The New Expression
June 11, 2021
The country of Denis Sassou Nguesso has produced long arguments to justify its motivation to withdraw the exploitation permit of the iron deposit of Avima, a locality between Cameroon and the Republic of Congo.
The company Avima Iron took to the Paris-based International Arbitration Chamber, criticizing the Congolese state for not having played fair and withdrawing the operating license.
This June 9, 2021, the Congo served as arguments to show what forced it to take this strong measure. In the summary of the document, there are eight main reasons. The Congolese State maintains, among other things, that: "This withdrawal follows multiple formal notices addressed to the company, following the latter's inability to develop any infrastructure since 2013;
• Sundance Resources Limited no longer presents a bankable file in order to allow the development of the so-called Mbalam permit.
• The company has also never complied with certain legal clauses provided for in the operating agreement granted to it on November 29, 2012.
It is therefore clear for the Congo that: “The company has never complied with certain legal clauses provided for in the operating agreement granted to it on November 29, 2012, in particular with regard to its technical and financial capacities or those of a partner consortium ”, we are told.
The Congolese mining codeTo defend themselves more solidly, the Congolese authorities have appealed to the texts in force which frame the mining code drawn up in 2005. In its article 62, it is written: "The holder of an exploitation permit who, after twelve months from the date of allocation has not started the development work of the mining field, may have said permit withdrawn by decision of the Council of Ministers on the proposal of the Minister in charge of Mines, without right to compensation ”, and this is not all since article 91 also tells us that: “In addition to the cases referred to in articles 36.53 and 62, any holder of a mining title or of an authorization to lease a mining title may, after formal notice , have their leasing title or authorization withdrawn in one of the following cases:
- failure to pay mining royalties due to the State and to local communities, according to the tax regime in force, transfer or lease not in accordance with the rules established by this Code;
- serious breaches of the requirements of the central administration of mines in matters of police, safety and hygiene or in the event of non-observance of the measures imposed in application of article 138. The company which does not respect the clauses may see his research permit reported for:
- prolonged or persistent inactivity, activity clearly unrelated to the financial effort subscribed, failure to comply with the commitments made as referred to in the deed conferring the title and in the Agreement referred to in article 98 " .
In addition to this arsenal of texts, it is also planned that, the contracting company which shines by a strong inactivity see its title and its authorization of exploitation taken again for absence or prolonged insufficiency of exploitation manifestly contrary to the potentialities of the deposit or in the interest of consumers and not justified by the state of the market, exploitation carried out under conditions likely to seriously compromise the economic interest, conservation and subsequent use of deposits, non-observance of the conditions laid down in Article 134 and non-compliance with the commitments mentioned in articles 99 and 101 of this law.
According to the Congolese authorities, Avima Iron has fallen victim to all these shortcomings. The Congolese power explains to have been obliged to decide otherwise. "Following decree No. 2020-644 of November 30, 2020, the operating license for iron known as the Nabéba license was withdrawn from the company Congo Iron SA, a subsidiary of Sundance Resources," the sources explained to the Congolese Ministry in charge. mines.
It should perhaps be remembered then, Congo Iron had benefited from the Nabéba operating license for a period of more than 7 years. During this period, Congo Iron failed to achieve any significant progress, thus depriving the Republic of Congo, and by extension, the Republic of Cameroon, of significant social and economic benefits. In order to safeguard the national and regional interest, the State of Congo relied on the Mining Code of 2005 in order to withdraw the said permit.
The question of compensation
Another aspect that agitates the populations in this affair is the question of compensation. Avima claims 27 billion dollars or about 15 trillion CFA francs in Congo. A bad request according to the Congolese government which explains that: “The State of Cameroon should not cover the reimbursement of exploration costs advanced by Sundance Resources Limited. These costs should be included in the specifications of the company to which the Mbalam license will be reallocated. … This company, selected by tender, would benefit from being in direct partnership with Bestway Finance Limited, or its parent company, Qiandga Mining Group, whose subsidiary, Sangha Mining Development SASU, holds all of the Avima, Badondo and Nabeba, in the Republic of Congo.”
In the meantime, we have been given further insight: “Sundance Resources has been unable to develop the two deposits combined for more than 8 years since the mining agreement relating to Mbalam was awarded to it. The probability that it will succeed in the context of this new context is very low, especially since Sundance Resources has failed, for more than a decade, to set up a consortium capable of ensuring the structuring, technical and financial. , of the combined project. It is moreover this failure which explains why the company has never been granted an operating license, since the establishment of said technical and financial partner was a prerequisite for the granting of this title ”, information not contested or invalidated by the other party
In the official documents we were presented with the production potential in Direct Shipping Ore of Mbalam. It has been shown that over the first 12 years; there is an estimated production of 10 million tonnes per year, while the potential of Nabéba amounts to nearly 30 million tonnes per year. Nabéba therefore represents 75% of the DSO production potential of the first 12 years. The Nabéba deposit also offers better quality iron, with particularly low alumina and silica contents, and therefore attractive from a commercial point of view. Mbalam's operating plan provided for mixing the fruits of the extraction of its deposit with that of Nabéba in order to improve its commercial potential.
source: https://www.237online.com/affaire-avima-iron-le-congo-se-defend/
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