Congo Govt Says Mining License Review Complete
18 February 2008
Source: Dow Jones Commodities Service
By Andrea Hotter
LONDON The Congolese government has completed a review of the country's mining licenses, the findings of which are now available to mining companies, the country's vice-minister of mines said Monday.
A number of miners face amendments to their contracts and the rest will be canceled, but it isn't clear which category companies fall into. However, the findings are not final - all companies have the right to appeal the process and renegotiate.
The next stage is to work with companies to construct fair contracts, Congo's Victor Kasongo added.
He urged all parties to enter into the process "with open minds and positive expectations," so that matters can be concluded promptly and effectively and with the least possible impact on operations and revenues.
Attention is focused on those licenses issued between 1996 and 2005.
"Congo wishes to work with the mining companies to construct contracts that are just, both for the people of the Congo, for the companies who are investing in our country, and for the investors and shareholders who support the process," Kasongo said.
A commission found that not one license was "properly constituted" and Kasongo said an appeal process is now in place for companies to present their cases for license reclassification.
The canceled entirely is a category that represents licenses for which "no realistic rectification was possible, where the ineptitude or the illegality involved in the contract or the issue of license was such that it was simply not possible, or not reasonable."
In November, a 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. Company share prices suffered at the time as a result.
A spokeswoman for Katanga Mining, which has since merged with Nikanor, said the company hasn't yet received the findings of the license review, while First Quantum also said it had received an update on the situation.
A spokesman for Anvil said the company hadn't received or heard anything from the Congo government, but expected to have some news this week.
Earlier Monday, Anvil halted trading in its shares on the Australian stock exchange and said it was to provide an update on how the mining license review will impact the company within the next 48 hours.
AngloGold Ashanti, Prairie International and Lundin weren't immediately available for comment.
The rationale behind the review is to help restore Congo's mining sector to its once wealthy glory. Katanga province in Congo's southeast in particular is potentially an economic dynamo. At their peak, its mines contributed 80% to the country's gross domestic product, but output declined dramatically due to internal conflict and lack of reinvestment.
The government is confident it'll reach its target of 500,000 metric tons a year of copper production annually by 2011. The country also holds an estimated 10-15% of the world's copper reserves, with exploration expected to increase this figure to perhaps 20-25%, the government has said.
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