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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (44780)	10/8/2009 9:12:57 PM
From: LoneClone	Read Replies (1) \| Respond to of 197504

Freeport in standoff over copper mine By William Wallis and William Macnamara in London Published: October 9 2009 00:27 \| Last updated: October 9 2009 00:27 ft.com Freeport-McMoRan, the US copper and gold miner is locked in a standoff with the Democratic Republic of Congo over its rights to one of the world’s richest untapped copper and cobalt deposits. The company, which has invested nearly $2bn bringing the Tenke Fungurume mine in Congo’s southern Katanga province to production, has been given until Monday to resolve a long-standing dispute over the terms of its licence, or risk losing it. The first phase of the Tenke Fungurume project is set to deliver 250m pounds of copper annually but is thought to have potential to expand into one of the most productive copper mines in the world. The outcome of the dispute is likely to have significant consequences for Freeport, the world’s largest listed copper miner. It could also determine Congo’s prospects for attracting other multinational miners at a time when Chinese companies are establishing a strong foothold in the country. “The entire mining industry and international financial community is watching intently to see how our contract is handled,” according to Richard Adkerson, chief executive of Freeport. He said the company has offered “economic concessions”, but these do not alter the economics of the original contract, which, like dozens signed during the country’s war and the transition that followed it, has been under review. According to Victor Kasongo, Congo’s deputy minister of mines, Freeport is resisting demands to increase the state’s stake and conform with the country’s mining code – a position that he claims puts it outside Congolese law. Freeport acquired a 57 per cent stake in the venture when it bought Phelps Dodge in 2007. Mr Adkerson said the company has a legally enforceable contract that was re-negotiated between 2003 and 2005 and was the basis for their $2bn investments. New demands include raising the equity in the venture of Gecamines, the state copper miner, from 17.5 to 45 per cent. “What they are asking for is to retrieve items they conceded in the 2003-2005 negotiations but keep the significant taxes and royalties we agreed to. You add that together and it really does not make economic sense,” he said. Billions of dollars of further investment in expanding the mine and upgrading road, rail and power infrastructure around it are at stake. The state stands to gain more than 50 per cent of the total value of the venture, Mr Adkerson added. “It is not in any way a sweetheart contract. It is fair and consistent with international standards,” he said. A deadline to agree terms more favourable to the state passed on Tuesday, but the government extended it amid tense negotiations. Mr Kasongo has succeeded in extracting upfront payments and improved state equity in a host of smaller ventures during the long review process he has overseen. But when Canada’s First Quantum refused to comply it had its licence revoked last month. It is now threatening to go to international arbitration.