TORONTO (miningweekly.com) – Base-metals-miner First Quantum Minerals may go to international arbitration to protect its rights to the Frontier copper mine, in the Democratic Republic of Congo (DRC), after operations were suspended last week.

CEO Philip Pascall said on a conference call that the arbitration case, if it went ahead, would be heard by Washington's International Centre for Settlement of Investment Disputes, and could take between two and three years before a resolution.

First Quantum is already involved in another arbitration process, this one under the International Chamber of Commerce (ICC) Court of Arbitration in Paris, related to the Kolwezi tailings project in the DRC.

The Kolwezi case appears likely to be a shorter one, with a result expected during 2011, Pascall said.

First Quantum stopped operations at Frontier and withdrew its staff on Friday after receiving a letter from government-owned Sodimico, which says it has been granted titles for the Frontier operation, demanding that mining be stopped and that the company leave the property.

Pascall said that the withdrawal of the Frontier mining permit has no basis in DRC law, and is amounts to expropriation.

It is effectively “retribution” and an attempt to put pressure on First Quantum because it initiated international arbitration after the Kolwezi licence was cancelled, he said.

Until the licence was cancelled, the company with rights to the Kolwezi tailings project was 65% owned by First Quantum, while DRC government company Gécamines held 12,5% and the government had 5%.

South Africa's Industrial Development Corporation (IDC) and the International Finance Corporation (IFC) also held stakes, and have joined the arbitration process.

Work on the site stopped in September last year, following the licence cancellation a month earlier, and the government put the operation under liquidation this month.

At First Quantum's request, the ICC issued an order a couple of weeks ago prohibiting the DRC from transferring or allowing the transfer of the Kolwezi mining permit until the arbitration case was resolved.

However, the governmenthad apparently awarded the mining licence to a company connected to Israeli tycoon Dan Gertler and then, last week, London-based ENRC announced it was buying an indirect majority stake in the asset.

Pascall indicated on Monday that First Quantum had made contact with ENRC after the announcement, “to point out the flaws in the way they were going”.

“And we had a very brief response which suggested that they weren't very receptive to that.”

The fact that the government ignored the procedural ruling from the ICC raises questions over whether it would honour a ruling by the arbitration panel in the Kolwezi procedures, or a potential arbitration case for the Frontier mine.

Pascall warned that the developments are bad news for the DRC, as it seeks to attract international investment.

“The fragile foreign investment environment is severely damaged, and likely to remain so for some time without remedial action,” he said.

“The DRC needs reputable investors and the tax and employment opportunities that are brought by such investors.”

Pascal was reluctant to comment on any potential outcomes of the arbitration cases, but said that First Quantum's other projects will not be affected by the developments in the DRC.

“While we talk about international arbitration, our focus is indeed elsewhere,” he said.

“We have project teams that are very busy, we have got a lot of work on our plates.”

The company has mines in Zambia and Mauritania, is building the Kevitsa nickel project in Finland and plans to restart the Ravensthorpe project, which it bought from BHP Billiton and is refurbishing, early next year.

Pascall dismissed speculation that Kolwezi was targeted because the mining contract had areas which were unclear.

“This is complete nonsense. The Kolwezi contract is in accordance with the country's mining code and was signed by the IFC and the IDC,” he said.

Shares in First Quantum rose 4,6% on Monday, to C$61,37 apiece by 14:53 in Toronto.