On March 13, Congo-Brazzaville awarded the Chinese Sangha Mining Development the exploitation of three iron deposits in the north of the country. These mining permits were first awarded to three companies linked to Australian interests before the Congolese government took them back in November and angered the miners. They are threatening the Congo with lawsuits and demanding billions of dollars in compensation. The case could lead Brazzaville to arbitration in London.
At first glance, the picture taken on Saturday, March 13, at the Treasury Department premises in Brazzaville is quite beautiful. We see the ministers miner and Geology, Pierre Oba, the Budget, Calixte Ngagongo and the Minister of Planning, Ingrid Olga Ebouka-Babackas, ratify with Manuel André, the representative of the company Sangha Mining Development, agreements awarded to this company – and for twenty-five years – operating licenses for three iron deposits in Badondo , Avima and Nabemba.
The picture is beautiful and the speakers are thrilled. Sangha Mining Development, which recovers a potential of one billion tonnes of high-quality iron ore, promises $ 10 billion in investment and construction of a railway line to Pointe-India, in the Pointe region – black, where an ore port will be installed. Minister Pierre Oba already sees Congo occupying “the third world rank of quality iron producers”, according to comments reported by the online website of the Ministry of Finance.
If the marriage contract is signed, one of the spouses has not yet fully settled his previous divorces. In fact, the operating licenses for Sangha Mining Development were officially taken over in November last year from two mining companies, Congo Iron and Avima Fer, for “insufficient utilization (…) and non-payment of royalties prescribed by law.”, According to the reason given by the Congolese Journal dated November 30, 2020. These two companies dispute these complaints and have announced that they intend to take the matter to court. Another company, Equatorial Resources, has had a simple exploration permit withdrawn, also ceded to the new Chinese partner. In his case, the state accused him of having transferred part of the permit to a third party.
Brazzaville soon sued?
Among these companies, Congo Iron SA, owned by Australian Sundance Resources, fully intends to sue the Congolese state before the International Court of Arbitration in London. Congo Iron, whose operating license relates to the huge iron deposit on Mount Nabemba, with documented reserves of 517 million tons, says it has invested $ 400 million in the development of the first phase of the project. A calculation based on the potential profit on the deposit allows the company to estimate the losses caused by the cancellation of its license at $ 8.76 billion, or an amount equivalent to 60% of Congolese GDP.
Congo Iron feels all the more entitled to resort to international arbitration, as it says it has respected the terms of its contract, contrary to the claims of the Congolese party. “If the Congolese state accuses us of a certain slowness in the start-up of the deposit, it can only blame itself,” specifies Aimé Emmanuel Yoka, director general of Congo Iron, stressing that Brazzaville did not fulfill its part of the contract, especially without to ensure the supply of electricity to the site. In addition, “the government has not validated our environmental and social impact assessment, even though it was conducted in accordance with international standards. Without this study, however, it is impossible to raise funds from international investors. “And therefore to start operations.
“Today, the Congolese state does not pretend to remember all these suspensive clauses that are still written in black and white in the mining agreement,” regrets Aimé Emmanuel Yoka. As for the taxes on unpaid taxes put forward by the government, they are “fake”, according to the director general. “We have paid the surface tax,” assures Congo Iron, which, however, says it has denied certain tax payments on unofficial accounts from the Ministry of Mines “because the law prohibits tax payments not made directly to the Treasury”.
Therefore, if the Australian Sundance Resources disputes the decision on profit, he also regrets the method used by Brazzaville to oust him, who according to him “does not respect the law”. Congo Iron says it was only notified on 13 November 2020 of a formal statement signed by the Minister of Mines in July of the same year, which gave it one month to start mining. Congo Iron therefore received an expired formal notice, and on November 30, the permit was finally withdrawn. The directors of Sundance Resources, who have also respected the deadline of sixty days, and even extended it by one month, are no longer under any illusions about a possible deal with Brazzaville. “It is international arbitration that decides,” the director general said. The case is in the hands of the lawyers.
For its part, Australian Socrates Vasiliades plans to sue the Congolese state, from which it claims $ 27 billion in compensation, equivalent to two years of the country’s GDP. The head of Avima Iron Ore, whose local subsidiary Avima Fer has lost its license for the Mount Avima deposit, also suspects certain politicians – whom he does not name – corruption. According to a press release from the company, “the license extract appears to have been made in the sole personal interest of certain Congolese leaders and third-party aides.” It therefore does not preclude the prosecution of certain members of the Congolese government. The Australian says he is so much more upset that he assures us that “the exploitation of the deposit would begin in the first quarter of this year.”
A new unknown Chinese partner in the mining sector
So far, Brazzaville does not appear to be concerned about these threats of prosecution and these requests for compensation. “The Australian miners did nothing for ten years,” said a Congolese official close to the mining minister, who wished to remain anonymous, “it is normal that after a while we want results.” The fact that the price of iron on the world market after years of sluggishness in recent months is no doubt unrelated to the interest aroused by deposits in northern Congo. “The time is right,” notes a connoisseur of the market, “and the desire to combine the three mining licenses in the northern country is in itself an interesting idea,” he adds. Moreover, the desire to see the ore evacuated to the south in the Pointe-Noire region rather than travel through Cameroon, as planned by Congo Iron and Avima Fer, “may be an economic deviation, but it is a political choice.” The method of expelling Australians miners still raise questions. “The business community is so much more concerned that Congo Iron and Sundance Resources had a good reputation and did a more than proper job,” analyzes an observer from the mining sector.
What particularly promotes the conversations between the players in the sector is the choice of the new Chinese partner in Brazzaville. In fact, Sangha Mining Development is a complete stranger in the mining sector. Managed by a former French banker, Manuel André, the company, which was registered in October 2020 in the Pointe-Noire Trade and Personal Property Credit Register, which RFI consulted, as its sole partner a Hong Kong company, Bestway Finances limited. A structure where we do not know the shareholders and which seems to have been created recently. Therefore, “the question arises as to the real capacity of Sangha Mining Development to carry out a mining project of such magnitude,” comments one specialist.
Brazzaville needs to be more transparent, the founder notes by the anti-corruption collective Sassoufit, Andrea Ngombet, declaring: “Without prejudice to this company’s expertise hitherto unknown in the mining sector, we ask for complete transparency in the contract and in the composition of this company’s capital.” Same story for the deputy coordinator of the NGO “Publish what you pay”, Brice Makosso, who finds it “important for the Republic of Congo to pass on information on the award of licenses, contracts, but also the criteria technical and economic as the” beneficial owners “of mining projects.
.
