AUSTRALIAN miner Sundance Resources said it would launch an arbitration process against the Republic of Congo for $8.76bn in damages after the government terminated its contract to develop the huge Nabeba iron-ore deposit, reports said.
The Nabeba permit is part of its huge Mbalam-Nabeba project, which straddles the border of Congo and Cameroon. The iron ore explorer started operations in northern Republic of Congo in 2010 and has invested almost $300m. It has yet to begin extracting iron ore.
Sundance said the cancellation is ‘breathtaking in its size and audacity and in contempt of Congo’s mining laws.’
The deposit on the Congolese side is estimated to hold at least 500 million tonnes of the ore.
Sundance Resources was officially delisted from the Australian Securities Exchange after its troubles in Africa, the Market Herald reported on Monday.
The Congolese government has instead awarded three new permits to a relatively unknown company with Chinese backing, Sangha Mining Development, a company based in the city of Pointe-Noire, according to the decree obtained by Bloomberg.
In decree jointly signed in November by President Denis Sassou Nguesso and four ministers, the government cited several reasons to withdraw the contract, including insufficient development and a failure to pay royalties.
CEO Giulio Casello said Sundance had notified the government of its challenge after hearing of the decision ‘through informal channels’ earlier in December. The company has struggled to raise funds for the project because the environmental impact certificate had not been signed, he said.
In 2013, the Chinese company Sichuan Hanlong attempted a $1.2bn takeover of Sundance that would have given it control of the iron-ore project.
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