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(HERALD, REUTERS) Resume talks on US$500m copper project, says minister

Resume talks on US$500m copper project, says minister
Reuters

Democratic Republic of Congo and First Quantum Minerals Ltd must restart talks on a US$500 million copper project or risk scaring off future investors, the mines minister of Katanga province said yesterday.

DRC cancelled the Canadian miner’s Kingamyambo Musonoi Tailings project in the country’s copper and cobalt heartland Katanga in August as part of a review of 61 mining deals.

Freeport-McMoRan’s giant Tenke Fungurume copper mine has also failed to clear the review, and officials from the US-based firm are in Congo with the aim of negotiating a settlement to the protracted contract dispute.

"Given the fact that we have not yet wrapped up the review of TFM and, more importantly, that we’ve just cancelled, that creates uncertainty in the sector," provincial minister Juvenal Kitungwa said.

"When there is uncertainty in the sector, we risk seeing some possible investments no longer happen," he said.

Though some government officials have stated that Congo remains open to talks with First Quantum, the country’s Mines Minister Martin Kabwelulu said on Wednesday that the dispute would now be settled in the courts.

Congo launched the contract review in early 2007 in an effort to boost state revenues from agreements signed mostly during the chaos and corruption of a 1998-2003 war and the transitional government that followed.

The mining sector is the impoverished central African nation's principle foreign currency earner.

Repeated delays in the review process and continuing uncertainty over two of the country's biggest foreign-owned mining projects, however, have undermined investor confidence in Congo’s high-risk but potentially lucrative copper and cobalt sector.

Adding to uncertainty, mining officials said this week that some 25 "second tier" mining projects that had cleared the review could still face cancellation if they do not meet a December deadline to present feasibility studies. Congo saw a boom in interest in its vast and largely unexploited mining sector after 2006 elections meant to draw a line under decades of corruption, mismanagement, and war.

However, copper production fell by half due to the global economic downturn as prices plunged on a drop in demand last year from emerging economies in Asia, the principal market for Congolese mineral exports.

Though prices on world markets are slowly recovering and major mining projects in Katanga are restarting development, Kitungwa said Congo must avoid shunning companies like First Quantum, which plans to invest US$553 million in the KMT project.

"We recognise the central government's decision. We think that they are right. But what we are saying is that, given the size of First Quantum's investment, it is high time to restart dialogue and find a solution," he said.

"We want the central administration to try to lower its expectations in order to permit a return to dialogue. And we are asking KMT to lower its expectations as well." — Reuters.

Labels: COPPER, FIRST QUANTUM MINING

posted by MrK @ 7:47 PM