Vancouver-based copper miner First Quantum Minerals Ltd. is planning to put the issue on one of the worst expropriations in the Canadian mining sector on the agenda to be discussed at the upcoming G20 summit. Its US$765mln Kolwezi Tailing project in the Democratic Republic of the Congo was sealed off, after the government of CDR claimed that there was violation of Congolese law. There was no explanation provided on this matter. Also other assets of the company in Congo, the Frontier and Lonshi mines, are now under threat.
Instead of negotiating the contract with the Canadian company, the Congolese government signed a joint-venture agreement that gave the rights on the Kolwezi project to the British Virgin Islands-incorporated Highwind Properties Ltd., which is actually not mining company. According to First Quantum president, they were aware of this fact, but they were not aware of the process that was conducted for awarding the contract, or of any tender involving the project.
Sources said that passing the rights to the BVI company is part of a “grab-and-flip” strategy by the government, in which the rights are later sold to a third party, and insiders get profit. Highwind is mentioned in connection with an Israeli businessman Dan Gertler, who conducts business in the Congo. He is famous for his top-level government ties, and is known to control a large number of companies.
First Quantum not only lost the project, it was also ordered to pay a US$12-billion fine by a DRC court. Investors now place almost no value on the company’s Congo assets. The Canadian company has taken the case to international arbitration court.