Following a disagreement on an iron ore exploitation deal in 2020, Congo Republic has now resigned two mining agreements with Sangha Mining. Reportedly, this deal was previously withdrawn from Australian miners Sundance and Equatorial Resources, and Avima.
Delving into details, last year, the Congo government had revoked licenses on Avima, Badondo, which is operated by Equatorial Resources, and Nabeba, operated by Sundance, accusing that the companies had failed to meet the requirements to develop their high-grade iron ore concessions.
As of now, the Congo government has signed the licenses with Sangha Mining Development Sasu registered in Pointe Noire.
In an official statement, Sangha Mining said that it will invest $10 billion to support the develop the projects. While the company’s CEO, Manuel Andre mentioned that their firm plans to start work in Q4 2021, with further plan of commencing iron ore export in 2023, eventually reaching an expected annual production of over 100 million tons.
Those unfamiliar with Sangha, it is little-known company that is backed by Chinese investment and is embarking on its first mining project.
Pierre Oba, Congo’s mines minister said in a statement that the previously assigned operators were not able to bring the projects to stream a decade after agreements were signed. This is the key reason why the licenses were withdrawn.
Reportedly, following assigning the deal to Sangha, Avima Iron Ore Ltd. wrote to the Congo government, demanding to either reinstate its license or else pay for damages of worth $27 billion. Meanwhile Sundance, which is seeking to attain $8.76 billion in damages from the government, is furthering its plans to initiate an international arbitration against the Congo government.
Commenting on this, Oba said that their previous partners have decided to take the case to court and that the government had obtained a one-month truce prior to opening of discussions for potential compensation.