Friday, August 07, 2009

DRC cancels First Quantum contract

DRC cancels First Quantum contract
Written by Reuters
Friday, August 07, 2009 2:42:58 PM

Democratic Republic of Congo has cancelled a copper and cobalt mining contract with a unit of First Quantum following a review of major contracts launched two years ago, Deputy Mines Minister Victor Kasongo has said.

The contract review was launched in early 2007 in an effort to boost the government's stake in 61 agreements, most of which were signed during the chaos of a 1998-2003 war and a corruption-plagued post-war transitional government.

"KMT's contract was cancelled in accordance with its own provisions," Kasongo told Reuters, referring to First Quantum's Kingamyambo Musonoi Tailings (KMT) unit.

He said the unit had failed to begin commercial exploitation within the agreed timeframe.

Mining is the mainstay of the Congolese economy, which benefited from the commodities boom earlier in the decade, but recently has been hit hard by falls in metals prices and companies scaling back production.

The DRC government has also cleared four major mining deals after completing its long-delayed mining contract review, but the massive Tenke project has yet to be fully approved.

Congo approved contracts with AngloGold Ashanti, Banro, Mwana Africa, and Gold Fields, provided it completes a feasibility study at its Kisenge project, a statement on the government website said on Thursday.

Separately, Kasongo said the government has given two months to Tenke Fungurume Mining, the giant copper and cobalt project backed by Freeport McMoran and Lundin Mining, to complete the review of its mining contract in the country.

Tenke has yet to agree to the rewriting of the contract in accordance with new legislation, extra royalties on additional production, and the integration of the state company into management structures, Kasongo said.

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