Anvil halts Congo mine expansionAdvertisementEmail Print Normal...

Anvil halts Congo mine expansion
AdvertisementEmail Print Normal font Large font AdvertisementJamie Freed
November 15, 2008

THE fate of mining projects in the Democratic Republic of Congo is looking more grim after Anvil Mining reported a quarterly loss and said it would halt work on a $US380 million expansion to one of its mines.

Anvil shares fell 60c, or 39 per cent, to 95c yesterday, down from a peak of $18.40 last November. It reported a $US17.3 million ($27 million) third-quarter loss, including operating losses at two of its three mines, and stopped work on its Kinsevere expansion.

It had already spent or committed about half of the funds for the expansion, but it is now seeking to conserve cash amid lower copper prices and operating problems.

Anvil, which is listed in Australia and Canada, is the latest of a string of miners in the DRC - most of which are listed in Toronto and London - to report disappointing results. The perception of increased political risk due to intensified fighting in the eastern DRC, near the Rwandan border, has placed further pressure on the share prices of miners in the region and made it more difficult to obtain finance.

Although the fighting is far from the Katanga province in the north-west, the location of most mining projects, it has distracted the DRC Government and delayed the finalisation of changes to mining contracts.

Anvil's chief executive, Bill Turner, said it had recently agreed revised contract terms after discussions with the Government and state-owned mining company Gecamines but these had yet to receive final approval, without which the company would not have the certainty required to obtain finance.

On a conference call with investors Mr Turner did not disclose the terms. They will not be made public until the agreement is final. But he hinted the terms would be more onerous, albeit adequate for the company to continue operating in the country.

"There is a little gave or take but where we have landed is acceptable to us," he said.

Big miners, including BHP Billiton and Rio Tinto, have exploration projects in the DRC, which is highly prospective for copper, cobalt and diamonds.

BHP is also considering the development of a $US3 billion aluminium smelter in the nation.

"We are following the issues closely and at this time they are not impacting our activities, which are geographically distant from the unrest," said a BHP spokesman, Peter Ogden. "Any decisions associated with our activities will be based on our ability to work to our standards, primarily the safety of our people, and on progress and results."