Miners await Congo ruling

13/11/2007 - 22:00

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Several Perth-headquartered mining companies operating in the Democratic Republic of Congo are facing an uncertain future, following the Congolese government’s recommendation that 61 mining contracts with foreign companies be renegotiated or terminated.

Miners await Congo ruling

Several Perth-headquartered mining companies operating in the Democratic Republic of Congo are facing an uncertain future, following the Congolese government’s recommendation that 61 mining contracts with foreign companies be renegotiated or terminated.

The review of contracts was prompted by a report last year that found dozens of joint-venture contracts signed during the years from 1998 to 2003 were illegal or contained terms unfavourable to the government.

The review is likely to affect West Perth-headquartered Anvil Mining Ltd, which is listed on the Toronto Stock Exchange and has two operational copper mines in the DRC, with a third under development.

A statement issued to the ASX by Anvil last week said news reports had indicated that the contract on its flagship Dikulushi copper-silver mine had been recommended for termination, and that another joint venture and lease agreement held by the company had been recommended for renegotiation.

Anvil said it had received no written communication from the Congolese government regarding the agreements, although its share price slumped 11.3 per cent on the day of the review’s release.

Subiaco-based Moto Goldmines Ltd, which is listed on both the TSX and London’s Alternative Investment Market, and Balcatta-based exploration company Tiger Resources Ltd also also have operations in Congo.

According to the Export Finance and Insurance Corporation, foreign investors initially welcomed the Congolese government’s review, which was originally scheduled for release in August, but later became concerned about secrecy and delays.

EFIC senior economist Ben Ford said information flow about the review had been sporadic.

“It’s been an issue, on and off, for a couple of years. Some inquiries and reports have raised the question of how some licences for exploration or some of the joint venture agreements have been awarded,” he said.

Mr Ford said some outside observers expected the review would affect more companies than those with the 61 contracts.

“On a positive note, the DRC government is keen on foreign investment and they do not want to jeopardise that, even though the process is a bit opaque,” he said.

“It would seem on the surface that it will not involve a wholesale cancellation of licences, but maybe some tweaking around the edges.”

Tiger Resources Ltd managing director David Young said he had no idea when the company would be notified of the review’s outcome.

The official report is currently being assessed by the Congolese president and prime minister.

Two weeks ago, a leaked report indicated that Tiger may have its contract renegotiated, although the government has denied that the report was official.

Mr Young said the government appeared to have issued a blanket investigation into all joint venture agreements with foreign investors, including those like Tiger’s that were signed after 2003.

He said he didn’t believe doing business in the DRC was any different to a number of developing nations.

“I think there’s just a tendency in developing countries to seek benefits from rising commodity prices,” Mr Young said.

Anvil Mining was unavailable for comment.

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