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Mining licences for the mining concessions for Camec and Savannah Mining in the Democratic Republic of the Congo (DRC) in Katanga Province have been revoked. The licences were granted for an area known as C19. Before the licence repudiation, the owners were Boss Mining, owned by Camec, and Mukondo Mining, owned by Savannah Mining and Boss Mining. The rights over this C19 are to revert to Gecamines, the state-owned mining company. The decision was taken by the public prosecutor, and was based on what they deem as serious irregularities in the original issuing of the licenses. Such discrepancies are claimed to include the issuing of licence certificates without the fundamental articles of transfer, and without the required acceptance by the licensees, of their obligations to the state. This meant they did not specifically comply with certain articles of the mining code and the laws of the DRC. In response to this judicial decision, Camec issued a statement defending its position. “It is now suggested in the general attorney’s letter that due to administrative failings on the part of Gecamines and the registry that the concessions in the names Boss and Mukondo should be cancelled and the rights should revert to Gecamines. Camec believes that such a suggestion is totally unwarranted and that if, which Camec denies, there were any administrative irregularities these should be remedied in accordance with the obligations of the parties, including Gecamines, under the settlement agreement referred to above,” it states.
Camec has also been in the process of potentially acquiring Katanga Mining, and the mining company sees this is as motivation for the decision to revoke its licences.

On August 29 Camec announced it had made an offer to purchase all the issued and outstanding common shares of Katanga Mining on the basis on 17 common shares of Camec for each Katanga Mining. The very same day, the DRC’s justice ministry announced its decision to revoke contracts.  “Camec believes that this action is motivated by commercial forces in the DRC who oppose Camec’s proposed acquisition of Katanga.

 

Boss will continue to fight this unjustified threat in the DRC. In addition, Camec is actively investigating the possibility of bringing international arbitration proceedings under the terms of the settlement agreement referred to above and the possibility of bringing international arbitration proceedings against the government of the DRC (including its various agencies and in particular Gecamines and its directors) to recover any loss which it may suffer as a result of these actions (including but not limited to any reduction in value of the company in the event that the licences referred to above are lost and all costs incurred by the company in connection with its offer to acquire Katanga).”
The DRC government is reviewing all mining licences held by foreign companies, with the intention of ensuring they are all transparent, legally well-founded and based on international standards. Independent legal and financial experts are reviewing each contract because many were arranged during the civil war and its aftermath, with some potentially made in breach of procedures, regulations and laws.
Following the election of president Joseph Kabila last November, the DRC government has said it is working to enforce internationally recognised standards of regulation and law, so as to attract international investors to the DRC mining sector.
The DRC has been relatively successful in attracting investment, despite its tumultuous economic and political situation over recent years. The Overseas Private Investment Corporation (Opic) has just provide US$250mn in financing to Phelps Dodge, an affiliate of the US company Freeport-McMoRan Copper & Gold, for the construction of a mining operation at the Tenke Fungurume ore deposit in the southeast of the country.