London, England — MININGREVIEW.COM — 06 September 2010 – Vancouver-based First Quantum Minerals Limited is considering taking legal action against rival miner ENRC over the disputed Kolwezi project in the Democratic Republic of Congo (DRC).
First Quantum president Clive Newall told reporters here his company might demand billions of dollars of compensation for lost market value, after the DRC government had taken away the Kolwezi licence and ENRC had bought the rights to the copper project. “We are looking at our options for taking legal action against the ENRC group companies and we will be making that decision shortly,” he said.
Neither ENRC nor the DRC government were immediately available for comment.
ENRC has said it went through a major due diligence process regarding Kolwezi before buying rights to the project from a company controlled by Israeli resources investor Dan Gertler.
Newall said the legal moves could extend to other third parties. but he did not give names.
“If First Quantum sues ENRC, it would seek to recover the loss in market value due to the Kolwezi seizure, which analysts estimate at around US$2.5 billion (R18.75 billion),” Newall added.
ENRC announced last month that it had paid US$175 million (R1.3 billion) for a majority stake in a company with licences to a range of DRC copper assets, including Kolwezi.
Last month, the DRC government took away First Quantum’s rights to the Frontier copper mine “’ which accounted for about a quarter of the firm’s core earnings last year “’ in retaliation for pursuing arbitration on Kolwezi, Newall said. “We were threatened on more than one occasion that if we were not prepared to drop the international arbitration they would shut down Frontier.”
Frontier had been expected to produce about 94 000 tonnes of copper in concentrate this year before it was seized.