Conditions on the mend in the Congo?
Metals giants get go-ahead for Congo copper project
Tuesday April 10, 4:26 PM EDT
(All figures in U.S. dollars unless otherwise noted)
By Lesley Wroughton
TORONTO, April 10 (Reuters) - America Mineral Fields Inc (AMZ) on Tuesday said the new government of the Democratic Republic of the Congo had approved new terms for a $300 million Kolwezi copper-cobalt tailings project, potentially the largest direct investment in the war-torn central African country.
America Mineral Field's (AMFI) president and chief executive Tim Read said the amended deal with state-owned mining company Gecamines saw a phased project, starting with output of 42,000 tonnes of copper and about 7,000 of cobalt.
Anglo American Plc (AAL) is a 50-50 partner with AMFI in the proposed venture.
An earlier agreement from 1998, shelved because of the war that has dragged in six foreign armies, called for production of 75,000 tonnes of copper.
Kolwezi, near the southern town of Lubumbashi, contains mineral resources estimated at 112 million tonnes of tailings at grading 1.5 percent copper and 0.32 percent cobalt.
It is considered low cost and potentially highly lucrative with every tonne of tailings worth, in terms of recovered value, about $70.
"We can now move forward to obtain the presidential decrees needed to validate this transaction, finish the feasibility study, finance the project and start development," Read said.
But Read told Reuters that political stability was key and he was encouraged by the recent peace initiatives of Congo's President Joseph Kabila, appointed after his father Laurent was assassinated in January.
"He is certainly keen to be bringing a very stable environment for investment, particularly the mining industry," Read told Reuters. "But I think that we are not out of the woods yet...there has to be an agreement not only by the Congolese but by other parties to abide by the peace accord."
Read said stability was also vital to financing the project, which he said would be one of the biggest mining projects financed in sub-Sahara Africa.
"We have some hurdles to overcome but are confident these can now be overcome, given we have the fundamental basis of agreement between ourselves and the Congolese. This is a very important landmark in getting this thing developed," Read said.
He said it was difficult to estimate a starting date for the project. "It may take a year or more to arrange the financing and then about 21 months to construct," Read added.
Kolwezi material would be transported by rail via Zambia to the Indian Ocean port of Durban in South Africa and then shipped to buyers.
America Mineral shares were trading unchanged at 80 Canadian cents on the Toronto Stock Exchange on Tuesday, while Anglo was at 41.16 pounds in London. |
