Thursday, 28 October 2010
Congo resolves dispute over copper mine
Freeport-McMoRan, the US copper mining group, has resolved a long-standing dispute with the Democratic Republic of Congo over control of a vast copper mine by giving cash and shares to the government.
The Tenke Fungurume project, which could be ranked among the world's top 10 new sources of copper, has been plagued by uncertainty since 2007, when Congo's government decided to review all mining licences signed during the war in the country between 1998 and 2003.
More than a year of negotiations, thought to have involved the US government in support of Freeport, led to changes to the Tenke licence. Under the new terms, Gecamines, the state mining company, will own 20 per cent of Tenke, an increase from 17.5 per cent.
Freeport will pay $30m to Congo “in six instalments after reaching certain production milestones”, as well as $5m in “surface area fees”.
Freeport started producing copper at Tenke in south-eastern Katanga province in March 2009 and is still working towards full production. But until last Friday it did not have a clear licence.
Perception of risk surrounding the Tenke licence increased in August when Canada's First Quantum Minerals was stripped of the last of its assets in Congo.
The “international outcry” caused by this dispute might have “accelerated the settlement by strengthening Freeport's position and giving the government a greater incentive to show that it is not all bad”, said Chris Melville, an Africa mining specialist with Menas Associates.
Source: The Financial Times
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