tax wrangles threaten cameroon mine

Tax wrangles threaten Cameroon mine - Sundance
10/11/2008 10:59:43 PM
YAOUNDE, Nov 10 (Reuters) - Tax wrangles between Sundance Resources (SDL.AX


SUNDANCE RSC11 November,200811/11/2008 00:24 Sydney, Australia.
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0.120 +0.005 +4.350%

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SDL.AX , 0.120, +0.005, +4.350%) and the government of Cameroon are delaying the start of work and threatening the viability of a potentially large iron ore project, the Australian firm said late on Sunday.

Sundance owns 90 percent of CamIron, which intends to begin exporting the steel-making raw material from its $2.46 billion Mbalam project in the central African country by 2011.

"CamIron and the Cameroon government are still to reach a fair agreement on the rights, taxes and royalties to be contained in the memorandum of understanding," said CamIron's Chairman George Jones.

Sundance wants a stratgic partner for Mbalam, industry sources said last month, with ArcelorMittal and POSCO <005490.KS> seen as interested parties, but Jones said lack of agreement with Cameroon endangered the project.

"Various rights, taxes and royalties that are applied in Cameroon are extraordinarily high compared to the world prices and should this be fully applied in the Mbalam iron ore exploitation project, the project will not be economically competitive at the international level," said Jones, who is also non-executive chairman of Sundance, on state television.

The interview was recorded after the Australian company boss met Cameroon's Prime Minister Ephraim Inoni on Friday to discuss the project, which is running behind schedule.

CamIron said at the start of 2008 that it expected to sign an MOU with the government in March. [ID:nL21778820]

The concern raised by Sundance highlights the administrative bottlenecks identified by the World Bank, the International Monetary Fund and potential investors as one of the greatest handicaps to doing business in Cameroon.

Mbalam could be one of the world's biggest iron ore mines, with enough resources to provide 35 million tonnes per year for 20 years, according to company figures. (Reporting by Tansa Musa; Editing by Daniel Magnowski)