What's yours is mine

19 October 2010 By Una Galani Follow @ugalani

Vale and ENRC surprised investors earlier this year by buying licences expropriated from rivals Rio Tinto and First Quantum. Largecap miners’ willingness to sign morally dubious deals may reflect a scarcity of quality assets. These controversial transactions won’t be the last.

This content is for Subscribers only

Context News

Eurasian Natural Resources Group, the Londonlisted Kazakh miner, has said that it will "vigorously defend" any legal action by Canada's First Quantum Minerals over the acquisition of a disputed licence to mine copper in the Democratic Republic of Congo.

The government stripped First Quantum of the Kolwezi licence in August 2009. By January the DRC had sold it to Israeli mining entrepreneur Dan Gertler who has close links to the government.

In August, ENRC announced that it had bought 50.5 percent of a collection of mining assets in the DRC from Gertler for $175 million giving it an indirect majority interest in Kolwezi.

First Quantum launched arbitration against the DRC in February over Kolwezi which had a carrying value of $787 million at the end of 2009. The miner has also initiated legal proceedings against ENRC's subsidiaries.

Separately, Brazil's Vale in April agreed to pay $2.5 billion for a 51 percent stake in BSG Resources, an iron ore mining company in Guinea controlled by Israeli diamond magnate Beny Steinmetz.

Vale's purchase included rights to the Simandou iron ore deposit that the government stripped from Rio Tinto in 2008 on the grounds that it had taken too long to develop a mine. The AngloAustralian miner was left with half of its rights but maintains that it still has full legal title to the entire project.

As part of Vale's acquisition, the miner agreed to renovate the passenger TransGuinea railway which will not be used for iron ore transportation.

Email a friend

Please complete the form below.

Required fields *