Reuters reported that British Virgin Islands court will consider an application from units of Kazakh miner ENRC to strike out a USD 2 billion claim filed by Canadian rival First Quantum Minerals over a disputed Congo copper project.
Legal sources said that the hearing, which follows an application from the ENRC units in March to have the case dismissed on grounds of jurisdiction, was scheduled to last until Tuesday. The court is expected to reserve judgment.
The dispute between First Quantum and ENRC over the copper and cobalt project Kolwezi tailings, taken from the former has emphasized the difficulties faced by miners as they are pushed into tougher regions by a scarcity of low cost, high quality project, high metal prices and avid demand.
Kolwezi has been one of the most high profile examples of resource-hungry miners buying licenses expropriated from rivals, just months after Brazil's Vale bought rights to a Guinea iron ore deposit which had been stripped from Rio Tinto.
First Quantum held an exploitation licence for Kolwezi until it was revoked by the Democratic Republic of Congo government in August 2009. Control of the licence was passed by Kinshasa to a joint venture controlled by a cluster of British Virgin Islandsbased companies known as the Highwinds Group.
In August last year, and despite an international court of arbitration freezing any transfer of the permit, Londonlisted ENRC bought a majority stake in Camrose a company which in turn controlled the BVI based firms and the
Kolwezi licence.
ENRC has been fiercely criticized for its decision. Its shares fell 10% in the days following the deal and have underperformed since. But the miner has said it carried out full due diligence including probes into provenance of the licence and will defend itself in any legal action.
A decision by the BVI court to strike out the claim could end one of several legal avenues First Quantum is pursuing to seek compensation for the revocation of its Congo licenses. It could also pave the way for a settlement with ENRC over equipment at Kolwezi, machines which First Quantum technically owns and which are critical to ENRC starting work there. ENRC investors will hope the start of work at Kolwezi could prompt the market to look again at ENRC assets such as its Congo deposits, which are widely recognized to be undervalued.
Analysts said that it will also have to solve broader governance concerns for a full re rating of the poorly performing stock. First Quantum, which says it invested USD 430 million in the copper cobalt project by the time it was confiscated filed its suit against the BVI-based units last year and is claiming alongside its partners, USD 2 billion in damages.
(Sourced from Reuters)
