August 17, 2009 / 12:16 PM / 9 years ago

UPDATE 1-Congo may renegotiate cancelled First Quantum deal

* Contract review chief says willing to talk

* First Quantum lobbied Prime Minister after cancellation

(Adds detail, background)

By Joe Bavier

KINSHASA, Aug 17 (Reuters) - Democratic Republic of Congo may review its decision to cancel a copper and cobalt project in which Toronto-listed First Quantum Minerals (FM.TO) is the majority stakeholder, a government official said on Monday.

Earlier this month, the government cancelled a contract with First Quantum’s Kingamyambo Musonoi Tailings (KMT) unit following a review of 61 mining contracts. [ID:nL6706669]

“For KMT, the contract that was dissolved, the government remains open to discussions. There is still a possibility of renegotiation,” Emile Bongeli, the head of the government’s contract review panel, told Reuters.

First Quantum’s wholly owned subsidiary Congo Minerals Development wrote to Congolese Prime Minister Adolphe Muzito soon after the contract’s cancellation, lobbying the government to reexamine its decision. [ID:nLB34276]

At the time of cancelling the contract, the government cited five points, including non-payment of royalties and the failure to adhere to an agreed timetable, as reasons for the contract’s termination.

The contract review, launched in early 2007 following elections the year before, was intended to boost revenues from the country’s once-lucrative mining sector and bring contracts up to international minimum standards.

Four of the last remaining contracts were approved in the Aug. 6 decision, but the flagship Tenke Fungurume copper and cobalt project was not given the final green light.

Separately, Congolese authorities have held three Tenke employees on suspicion of embezzling millions of dollars in a visa and work permit scam [ID:nLF124166].

Editing by Daniel Magnowski, Editing by Peter Blackburn

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