Exxaro cautiously optimistic on Kipushi zinc
Allan Seccombe
Posted: Thu, 16 Aug 2007
miningmx.com
[miningmx.com] -- EXXARO Resources, one of South Africa’s largest diversified mining companies, is talking to the Democratic Republic of Congo (DRC) government about its claims to the Kipushi zinc and it is cautiously optimistic some sort of agreement might be reached without resorting to the courts.
Exxaro has hopes that a review of mining contracts signed with the DRC government will give its some succour, said outgoing Exxaro CEO Con Fauconnier.
The state minerals company Gecamines has issued the rights to Kipushi to another party after putting the zinc and copper project out to tender earlier this year.
very constructive meetings with the deputy minister of mines
Exxaro and its partner First Quantum have argued they had a legitimate claim to Kipushi, which was shut in 1993 because of a lack of finance when it was in the Gecamines stable.
Kipushi is estimated to have a measured and indicated resource of 16.9 million tons with an average grade of 16.7% zinc and 2.2% copper.
“We are not happy with what happened there, but we think things are starting to turn around in the DRC,” Fauconnier said.
“We’ve had very constructive meetings with the deputy minister of mines (Victor Kasongo) there recently. His approach, I think, would be isn’t there a way to find some accommodation here. Where it will lead us is unclear at this point,” he said.
“We find him a very approachable guy and we believe he’s intent on bringing some order to the mining in the Congo and we would encourage him to do that,” he said.
Exxaro is pinning some of its hopes on the review of mining licences underway in the DRC since March this year, which led to a suspension of the issuing of new contracts.
Up to half of the mining contracts signed in he DRC may be unfair to the state and have to be renegotiated, Kasongo told Miningmx in April, citing investors not having the capital to develop the projects they’ve been awarded or not having met their commitments in developing the assets they have.
Exxaro and its partner First Quantum, which acquired the Kipushi asset in its takeover of Adastra, have been accused by Gecamines’ Paul Fortin of not doing very much with the asset.
Kasongo estimated that about 70 companies would be affected by the review in total, though not all of them would have to adjust their agreements, and he said no contracts would be annulled as long as they’re “clean.”
The review process has Exxaro’s full support.
“We are quite happy with that because if they’re serious about this hopefully some good would come from it. They seem to be serious in putting things on an even keel and introduce international best practise,” Fauconnier said.
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“They’ve got a long way to go, but at long last one is starting to see things becoming a bit more sensible than they’ve been in the past.”
Exxaro appears to be willing to reach a compromise where if it doesn’t win back Kipushi then it would be willing to be an offtake partner for zinc concentrate from the project.
Exxaro is casting around for zinc concentrate for its 110,000 tonne/year Zincor refinery in South Africa because there is uncertainty about the length of life left at its Rosh Pinah mine in Namibia. Anglo American’s Black Mountain zinc mine in South Africa is also nearing the end of its life.
The Gamsberg development project near Black Mountain, one of the largest zinc deposits, has traces of iron and manganese which negatively affects the refining process. Exxaro needs fresh sources of zinc concentrate and it had pinned its hopes rather firmly on Kipushi.
Exxaro has not spoken to United Resources, the company which won the tender.
“Our discussions have not been eyeball to eyeball with those guys, our discussions have largely been with Gecamines as the agent on behalf of the government owning the assets,” Fauconnier said.
“We have some rights here, but in an area like the Congo you have to be as flexible as possible,” he said.
“The benefit we bring is that we are a ready offtake for material produced there. With the refinery here in South Africa you could obviate the early step of having to build a refinery in the Congo which is an expensive business,” he added.
“Hopefully, whoever gets in there, whether it’s us or someone else, maybe there is still a business opportunity in there for us.”
Gecamines has now put the Kamoto copper and cobalt project out to tender too despite Exxaro’s involvement in the project since the days of Mabuto Sese Seko, the former ruler of Zaire.
Exxaro has filed a claim related to a breach of contract at Kipushi against Gecamines in the courts in Belgium, which has links to the DRC as a former colonial overlord.
Exxaro is considering doing the same for the Kamoto mine. |
