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KOLWEZI
 
Compliance with ICC order 'in DRC's best interest' – FQM CEO
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25th August 2010
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BARRIE, Ontario (miningweekly.com) - TSX- and LSE-listed First Quantum president Clive Newall said this week it would be in the Democratic Republic of Congo’s (DRC’s) “best interests” to comply with the International Chamber of Commerce (ICC) orders regarding the disputed Kolwezi mining licence.

“Every sovereign state with its own sovereign laws can choose whether it complies or it doesn’t,” Newall told Mining Weekly Online.

“There is nothing the ICC can do if the DRC chooses to go the other way.  However, as a country seeking international investment, it is in the interests of the DRC to abide.”

First Quantum took the DRC government to the ICC Court of Arbitration after the state revoked its mining licence for the Kolwezi tailings – a copper/cobalt project in the Katanga province, where the company had already spent $750-million in acquiring and developing the property.

The government cancelled the licence in August 2009, saying there had been breaches of the licence conditions.

First Quantum said the ICC issued two procedural orders last week, prohibiting the government to transfer or allow the transfer of the Kolwezi mining permit, as well as prohibiting the government from taking any action in enforcing a DRC court decision that the company pay $12-billion in damages to the government.

The day after the orders were issued, London-listed ENRC announced it was buying indirect control of the Kolwezi mining licence from Israeli tycoon Dan Gertler.

ENRC, which has most of its operations in Kazakhstan, said it had performed “substantial legal due diligence” before buying the licence, and was comfortable in its ownership.

ENRC said it was aware of the ICC case, as it was a matter of public record.

"The ICC process between DRC and FQM is between them, and it would be inappropriate for an unrelated third party to comment," ENRC spokesperson Mounissa Chodieva said in response to emailed questions.

Asked on a conference call about First Quantum’s ICC case regarding Kolwezi, ENRC CEO Felix Vulius said “I would not be in the position to comment on any other company’s intentions”.

“As of this moment we are not aware of any legal proceedings by First Quantum,” he added on the call.

Newall said First Quantum was “reserving our rights to take legal action against any third parties”, declining to comment on whether First Quantum had contacted ENRC regarding its announcement.

Earlier this month, Newall said the arbitration process could take years, and that investors should not expect a “a nice clear-cut outcome in the next few months”.

‘SMEAR CAMPAIGN’


Last month, Bloomberg News quoted DRC ambassador to South Africa Bene M’Poko as saying that First Quantum was conducting a “smear campaign” against the country’s government.

In a telephone interview from London, Newall dismissed these allegations as being “absolutely ridiculous”.

“We respond as we’re required to do, and absolutely to the minimum amount. We have to disclose these issues,” he said.

An official at the DRC embassy in Ottawa, declined to comment, saying ambassador to Canada Dominique Kilufya Kamfwa was out of the country.

Last month, South Africa’s Industrial Development Corporation (IDC), a partner with First Quantum and the International Monetary Fund in the Kolwezi project, said it had engaged the South African government to assist in the dispute.

“There is a bilateral agreement related to the protection of investment between the two countries," IDC resources executive Ufikile Khumalo said at the time.

In July, the World Bank gave the DRC a $50-million grant to ensure transparency in the mineral trade.

This was after the Canadian government attempted to block the bank from writing off nearly $10-billion in debt for the DRC, because of Vancouver-based First Quantum’s case.

First Quantum was trading at $55,76 a share on Wednesday, down 2% from Tuesday’s close.

Edited by: Liezel Hill

 

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