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South Africa: Congo Quizzes Mining Groups in Licence Review
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Business Day (Johannesburg)
11 March 2008
Posted to the web 11 March 2008
Charlotte Mathews
Johannesburg
MINING groups operating in the minerals-rich Democratic Republic of Congo were given until the end of last month to respond to shortcomings in the mining licences they were granted under the previous dispensation.
Most companies told their shareholders they were already complying with the requirements identified, and would respond to the government. But a few were hit harder, and said they would be engaging the government in talks.
Fairfax resources chief John Meyer said the Congolese government had not been particularly investor friendly with companies such as First Quantum and Moto Gold Mines, and it was likely there would be continuing issues.
First Quantum was one of the companies worst hit, with some assets in "category C", implying the possibility of losing the assets altogether. There could be a modest reduction in First Quantum's ownership of the Kolwezi project, Fairfax said in a note to clients a week ago .
The share prices of the mostly copper-focused listed companies operating in the Congo have been underpinned by buoyant copper and cobalt prices this year, offsetting uncertainty on the outcome of the mining licence review.
The licences of two JSE-listed companies, Teal Exploration & Mining and Metorex, both with copper projects in the Congo, came under the spotlight.
Teal said in relation to its Kalumines property, which was 60% owned by Teal and 40% by the government's minerals body, Gécamines, the Congolese government had asked for the feasibility study on the project and for its social plans. It also asked that Gécamines should participate in the daily management of the company.
Teal said it was in phase one of development of the property, which was building up to output of 25000 tons of copper a year, and was busy with a study on expanding this to 40000 tons of copper cathodes.
The group said its social programmes included providing water and medical services , upgrading roads and contributing to infrastructure projects in nearby Lubumbashi. It also said it had recently appointed a Gecamines employee as a senior member of its Kalumines team.
Teal was confident all challenges could be addressed .
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Metorex said it had been asked to submit the original feasibility study for Ruashi to clarify the fairness of the split in the proportion 80% to Metorex, and 20% to Gecamines. It had also been asked for a description of its social programmes and of Gecamines' day-to-day involvement in Ruashi.
Metorex said it was active in social and community involvement, and welcomed Gecamines' participation in daily management. It believed Gecamines' interest was equitable.
Other companies, such as Anvil, Katanga and Camec, were also asked to submit social plans and feasibility studies or improve financial terms of agreements.
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