10 January 2012 – It is reported that Canadian-based First Quantum Minerals Ltd has come to an agreement with Eurasian Natural Resources Corp. PLC (ENRC) by which the latter would buy its mines and assets in the Democratic Republic of the Congo (DRC). First Quantum will also be settling legal claims in return for $1.25 billion after its operations were expropriated in somewhat irregular procedures by the government of the DRC.
The terms of the agreement stipulate that First Quantum will receive US$750-million upfront and deferred compensation of US$500-million through a three-year promissory note.
The First Quantum development took place after many of the country’s major mining contracts were reviewed. The outcomes of these reviews, which were negotiated while the DRC was at war, have in many instances been termed ‘questionable’.
In the case of First Quantum, it opposed the expropriation of its mines and sued ENRC, which had bought First Quantum’s expropriated Kolwezi operation, and all the parties involved in this transaction. First Quantum also took the DRC government to international arbitration in Paris.
Now, this settlement means that First Quantum will give up its Kolwezi, Lonshi and Frontier projects in a complete withdrawal from the central African country.
Had First Quantum been able to bring its three DRC project to account, it would have earned the US$1.25-billion settlement many times over. However, being in a rough neighbourhood would have lessened the value of the projects. It appears that First Quantum and ENRC wanted to avoid a long and expensive legal battle. In addition, the DRC government was keen to have prompt closure as it faced censure from the international financial community.