Sunday, October 11, 2009

DRC gives 25 mining projects an ultimatum

October 9, 2009

By Thomas Hubert Kinshasa

About 25 mining contracts in the Democratic Republic of Congo (DRC) involving "second-tier" copper, diamond, and gold assets could be scrapped if companies failed to present the results of feasibility studies by a December deadline, the Ministry of Mines said yesterday.

"We will see if the studies were done," said Deputy Mines Minister Victor Kasongo. "They will be able to present their reasons, and the Cabinet will decide whether to extend the deadline or withdraw the permits. The goal is to have these assets in capable hands."

The DRC completed a review of 61 mining contracts in August as part of an effort to boost state revenues from agreements signed mostly during the chaos and corruption of a 1998-2003 war and the transitional government that followed.

However, many companies that had their partnerships approved by the review panel had yet to present required feasibility study results, Mines Minister Martin Kabwelulu said on Wednesday.

"Certain partners started work without finalising their feasibility studies," he said.

The companies were initially asked to present the results among documents submitted at the start of the long-delayed review process.

But the government extended the deadline when it became clear the majority of companies had not completed their studies.

He said about 25 projects in possession of what he described as "second-tier assets" in the copper, diamond, and gold sectors were subject to the December deadline.

The DRC cancelled a copper and cobalt mining contract with Kingamyambo Musonoi Tailings, a unit of First Quantum, in August on the grounds that it had failed to enter into commercial production within an agreed timeframe.

Freeport McMoran and Lundin Mining have been given until Monday to complete talks with the government or risk losing their permits.

But despite lingering doubts over the fate of the country's largest foreign-owned projects, analysts expected completion of the review to boost investor confidence in the DRC's lucrative mining sector.