Congo: controversy over awarding of mining contracts

The exploitation of the iron deposits attributed to a Chinese firm previously conceded to Australian multinationals at the center of a conflict. At stake, the control of high-grade ores estimated at more than one billion tonnes.

The decision of the Congolese government published on March 13, 2021 attributing the management of iron ore to Chinese Sangha Mining Development is making waves. These are mining sites taken over at the end of last year from two mining companies of Australian rights represented by their branches, in this case, Congo Iron and Avima Fer, for “insufficient exploitation and non-payment of the royalties prescribed by the law “. Another company, Equatorial Resources, has had its exploration license withdrawn, also surrendered to the Chinese partner for “handing over part of the license to a third party.”

Motives undermined by the defendants, in particular the Australian multinationals Sundance Resources through its local subsidiary Congo Iron and Avima Iron Ore, owned by Avima Fer, who threaten to seize the arbitral tribunal in London for the law to be said.

“If the Congolese state accuses us of a certain slowness in the start-up of the deposit, it can only blame itself”, specifies Congo Iron, especially since “the government has not validated our environmental and social impact study, yet carried out in accordance with international standards. However, without this study, it is impossible to raise funds from international investors ”.

Congo Iron, whose exploitation permit concerns in particular the iron deposit of Mount Nabemba estimated at more than 517 million tons, claims an investment of 400 million dollars for the development of this project. In the absence of an agreement, “international arbitration will decide,” it is said.

Same story for Avima Fer who plans to prosecute the Congolese state for “non-compliance with contractual clauses” especially as “the withdrawal of the license seems to have been carried out in the sole personal interest of certain Congolese leaders and third party accomplices” . However, it is reassured, “the exploitation of the deposit would begin in the first quarter of this year”. As a result, the company is demanding the payment of $ 27 billion in compensation. While waiting for the outcome of this case, the Chinese Sangha Mining Development recovers a potential estimated at more than one billion tons of high-grade iron ore and promises to invest 10 billion dollars including the construction of a railway between Pointe-Indienne and Pointe-Noire which will house the mineral port. With this expected investment, the Congo could occupy “the third world rank of quality iron producers”, according to the Congolese Ministry of Finance and Budget.

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