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UPDATE 1-Congo says wins right to sell First Quantum assets
October 26, 2010 / 7:02 PM / in 7 years

UPDATE 1-Congo says wins right to sell First Quantum assets

* Congo says can proceed with plans for KMT

* First Quantum confirms failed to secure protection (Adds court document details, First Quantum reaction)

By Katrina Manson

KINSHASA, Oct 26 (Reuters) - An international court rejected a bid by miner First Quantum Minerals (FM.TO) to fully protect its disputed Congolese assets, the company said, a move Congo said gave it the right to proceed with their sale.

First Quantum said it had failed to secure complete court protection for its $750 million investment in a copper tailings project in Congo while it seeks to defend it, but no ruling had yet been given and the case is not due to be heard until 2012.

“We sought a series of measures to protect the asset and not all of these have been granted and that is not a surprise,” a spokesman for First Quantum said on Tuesday.

“The tribunal has not made a ruling on the merits of the arbitration. In fact, the hearing of the arbitration is not scheduled until 2012,” the spokesman added.

The Paris-based International Court of Arbitration (ICA) said it could not comment on the case.

Court documents obtained by Reuters dated Oct. 26, however, said First Quantum’s requests -- to block Congo and state mining company Gecamines from selling or transferring the assets until arbitration is concluded -- were rejected because they were “too large” and “unspecific.”

First Quantum has already lost two other concessions, and the battle over rights to the Kolwezi project, now partly owned by Kazakh-based mining group ENRC ENRC.L, has dented investor confidence in the country.

Congo officials welcomed the court’s decision.

“I‘m in heaven,” Bene M‘Poko, Congo’s spokesman on the deal with ENRC and ambassador to South Africa, told Reuters by telephone. “They (the court) rejected their request. It means that we can now proceed with whatever we have started without any legal hindrance.”

A First Quantum spokesman told Reuters the decision was “academic” as Congo was already in the process of liquidating the assets, and added the company was “happy” the court ruled that Congo and Gecamines could not enforce a separate $12 billion damages claim against it.


First Quantum sought international arbitration in February after its Kolwezi project was closed by Congo’s government late last year following a protracted mining contracts review.

A Congolese court also ordered First Quantum to pay Congo $12 billion in damages.

M‘Poko said he couldn’t comment any further but Martin Kabwelulu, Congo’s mines minister, said the court move meant that a company called Metalkol, a Congolese firm that ENRC has an interest in, could take over the project.

“The court has confirmed the transfer of titles to Metalkol; for the factory the parties were recommended to work with the liquidator,” he told Reuters in a text message, referring to a $400 million processing plant tied to the project.

“The court asked Congo not to execute the (Congolese) court ruling that required KMT (the Kolwezi project) to pay $12 billion,” he said.

The Canadian miner says it has invested $750 million in the project and said in August the Paris-based court had ruled against Congo “taking any action to transfer or allow the transfer of the Kolwezi tailings exploitation permit.”

Congo also stripped First Quantum of its licence for the Frontier mine, contributing to an 18 percent fall in the company’s third-quarter copper production. [ID:nSGE69I0KY]

The dispute between Congo’s government and First Quantum led to a delay in Congo’s efforts to secure debt relief -- eventually approved without Canadian backing -- and unsettled investors targeting the vast central African nation. (Additional reporting by John Irish in Paris; Writing by David Lewis; Editing by David Holmes, Gary Hill)

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