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First Quantum Minerals Ltd, Canada’s second-largest copper producer, said the latest challenge to its licences in the Democratic Republic of the Congo (DRC) is “retaliation” for an arbitration case and a decision not to join other investors on mining projects in the country.
The company, based in Vancouver, said that its rights to two copper projects in DRC may be revoked after the nation’s Supreme Court ruled in favor of a state-owned rival. First Quantum is already contesting another licence cancellation in the International Court of Arbitration in Paris.
The miner is “extremely concerned with the orchestrated attack” on First Quantum’s Frontier and Lonshi operations, Chairman and CEO Philip Pascall said in a statement today. The move is “obvious retaliation” for the company’s decision to seek arbitration over the Kolwezi project and its refusal to resolve the dispute by agreeing to submit to arrangements with unspecified third parties, he said.
First Quantum’s US$553 million Kinganyambo Musonoi Tailings Sarl project, located near the town of Kolwezi, was shuttered in August after a two-and-a-half-year review of the Central African nation’s mining contracts.
“We have no option but to vigorously pursue our rights to the Kolwezi project through international arbitration and, if necessary, will do the same with respect to any actions taken against Frontier and Lonshi,” Pascall said.
“I’m not aware of that and don’t have any comment,” Alexis Mikandji, chief of staff for the minister of mines, said by phone from Kinshasa, when asked about First Quantum’s statement that it had been asked to join with other investors.
DRC’s Supreme Court notified First Quantum on May 21 that it supported a claim by state-owned Societe de Developpement Industriel et Minier du Congo, or Sodimico, that the permits to the Lonshi and Frontier mining sites were illegally awarded to units of First Quantum.
The company’s subsidiaries obtained the deposits in 2000 and 2001 “on grounds that were verified as available by the mines minister of Congo,” Country Manager Mike Parker said yesterday. “The titles were reconfirmed as valid in the transfer to the new mining code in 2002 and 2003.”
First Quantum’s low-grade, high-tonnage Frontier mine was Congo’s biggest source of copper last year, producing 94,000t. The company expects Frontier to produce as much as 100,000t this year and has invested US$300 million in the project, Parker said. DRC owns 5% of the operation.
The open pit mine at Lonshi is depleted and a feasibility study has been under way since 2008 to assess the underground section of the mine, Parker said yesterday. First Quantum has been “encouraged by the results,” he said.