Australian miners press Congo over seized iron ore projects

Equatorial Resources

22/12/2020 08:30

* Three iron ore projects handed to mystery firm
    * Project cancellations come as iron ore prices hit record
highs
    * Sundance, Equatorial seek talks with Congo government
    * Miners to seek arbitration in 2021 if no resolution

    By Sonali Paul
    MELBOURNE, Dec 22 (Reuters) - Congo Republic has cancelled
iron ore projects with three Australian miners, two of the
companies said, and handed them to a firm "nobody knows anything
about", prompting one to seek $8.76 billion in damages from the
central African nation.
    The sudden cancellation sparked alarm among the project
owners after years of working closely with the government of
Congo Republic.
    Sundance Resources Ltd and Equatorial Resources Ltd  EQX.AX 
both said this week they had been notified through an official
journal that their mining or exploration permits had been
cancelled on Nov. 30.
    Mining permits for their projects were awarded to a company
called Sangha Mining Development Sasu.  urn:newsml:reuters.com:*:nL4N2J12PB
    They said Sangha Mining also won a mining permit for the
Avima iron ore project, previously held by Avima Iron Ore Ltd.
The three projects together have about 1 billion tonnes of
high-grade iron ore, Sundance said.
    "Ours is the most advanced and the biggest of them all. All
three permits have been issued to a company that nobody knows
anything about," Sundance Managing Director Giulio Casello said.
    Avima CEO Socrates Vasiliades had no immediate comment.
    Casello and Equatorial said they did not know what motivated
the move to hand the projects to Sangha Mining in breach of the
country's mining code.
    "There's lots of rumours and comments from in-country that
they are Chinese-backed. I don't have any proof," Casello told
Reuters.
    The mining code requires a company to have done exploration
work before applying for a mining permit. 
    Congo's official gazette said Sundance's permit was revoked
because the resource had yet to be developed and Sundance had
failed to pay royalties. Royalties are due once production
begins.
    The transfer of the three projects in northwest Congo comes
just as iron ore prices hit record highs above $170 a tonne amid
strong demand from steel makers in China, the world's biggest
steel producer.
    Sundance has spent A$400 million ($303 million) over a
decade exploring and trying to line up financing for rail and
port infrastructure, including from Chinese firms, for its
Mbalam-Nabeba iron project straddling the border of Cameroon and
Congo.
    Equatorial has spent A$100 million on its Badondo project.
    Equatorial Executive Chairman John Welborn said the issuing
of a mining licence to Sangha Mining for the Badondo project ran
counter to all of the company's work with the government until
recently.
    "It's highly unusual," he said.
    Equatorial said if the issues were not resolved in the next
six months, it would seek international arbitration for full
compensation from the Congo government.
    Congo's government spokesman was not available for comment
when contacted on Monday.    
($1 = A$1.3)

 (Reporting by Sonali Paul; Additional reporting by Aaron Ross
in Dakar)
 ((Sonali.Paul@thomsonreuters.com; +61 407 119 523;))