Sundance Resources files arbitration over iron ore project in Republic of Congo
A decree by the Republic of Congo president Sassou Nguesso on Dec. 17 terminated the contract between the Republic of Congo and Australian miner Sundance Resources Ltd. to develop the massive Mbalam-Nabeba iron-ore deposit.
Bloomberg reported that three of contracts for the project have since been awarded to a relatively unknown company with Chinese backing.
In a Nov. 30 decree jointly signed by Nguesso and four ministers, the government cited several reasons to withdraw the contract for the iron-ore deposit that straddles the Republic of Congo and Cameroon, including insufficient development and non-payment of rights.
Instead, permits for three areas known as Avima, Nabeba and Bandodo have been awarded to Sangha Mining Development, a company based in the city of Pointe-Noire, according to the decree obtained by Bloomberg. The deposit on the Congolese side is estimated to hold at least 450 Mt (500 million st) of the ore.
The Australian miner started operations in northern Congo in 2010 and has invested almost $300 million. Sundance has notified the government that it will dispute the withdrawal after hearing of the decision “through informal channels” earlier this month, Chief Executive Officer Giulio Casello said by phone. The company has struggled to raise funds for the project because the environmental impact certificate hasn’t been signed, he said.
Under the current agreement, differences with the government are to be resolved amicably within 60 days, after which the company can bring the matter to a court of arbitration in London, Casello said.
Reuters reported that Sundance Resources has initiated an arbitration process against Congo Republic for damages of $8.76 billion.
In 2013, the Chinese company Sichuan Hanlong Group attempted a $1.2 billion takeover of Sundance that would have given it control of the iron-ore project.
Sundance Resources said in a statement that it had formally initiated the arbitration process on Dec. 15.
The revocation of its permit was “breathtaking in its size and audacity and in contempt of Congo’s mining laws,” Sundance said.
Sundance is also in a dispute over its permit in Cameroon, with the company saying the government there has failed to issue a permit the company needs to extract from the site.