Camec withdraws Katanga bid because of uncertainty on its DRC licences
Natalia Kassakovich
5 September 2007
Source: Metal Bulletin
Central African Mining and Exploration Company (Camec) has withdrawn its $1.43 million takeover bid for Katanga Mining following last week's move by the Democratic Republic of Congo government to revoke one of its mining licences.
Camec took its decision because of uncertainty relating to the mining licence regime in the DRC, it said, which could cost the company its Mukondo and C19 production bases.
"Camec believes there is no legal valid basis for any revocation, and that the announcement of this potential action was clearly timed to impact Camec's offer for Katanga. Furthermore, Camec believes that this action is motivated by commercial forces in the DRC who oppose its acquisition of Katanga," it said.
Katanga is seen as a potentially lucrative project in a fast developing region, although any buyer would also need to negotiate with LN Metals, the London trading company that has an off-take agreeement for metal deliveries until the end of 2009.
Camec may seek international arbitration against the government and has already appealed to the minister of mines in the DRC.
It intends to recover any loss which it may suffer as a result of these actions and plans to take action against all agencies and individuals responsible for unlawful interference with the company's economic interests, it said.
"We are confident that we will be able to reconfirm our rightful ownership of our mining permits in the DRC. If necessary, we will commence international arbitration proceedings, which we believe will be successful as were the previous arbitration proceedings in 2004," said Camec's chief executive Andrew Groves in a statement.
Camec has been under attack from the DRC government since it began to accumulate a stake in Katanga in May. The government in July declared Billy Rautenbach - whose assets form the backbone of Camec - persona non grata, citing a warrant for his arrest in South Africa.
The authorities acted last week because Camec bid for Katanga before its review of mining leases was complete, according to a government spokesman Antoine Lekongo.
"We are in the middle of the process [of reviewing the mining contracts], and Camec are launching a bid - why have they jumped the gun? It pushed the government to look into the case because Camec shook the tree," he said last week.
The government's move - and the collapse in Camec's share price - paved the way for other bidders to emerge for Katanga.
The Toronto-listed company has confirmed talks with other parties, rumoured to include Anglo-American. Other potential bidders could include Anvil Mining or Nikanor and its major shareholder Dan Gertler.
Camec is free to reapply for its licenses, Lekongo said. It still owns the assets despite no longer having the mining rights.
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