Issues in DRC cut copper production for First Quantum

The ongoing uncertainty in the Democratic Republic of the Congo (DRC) ensured that the second quarter wasn’t a resounding one for First Quantum Minerals (FM-T).

The company reported that copper production fell by 8.3% to 85,400 tonnes thanks to a recent court ruling in the troubled central African country.

After having stripped First Quantum of its right to mine the copper rich Kolwezi project last year new legal issues arose in connection with its Frontier and Lonshi copper mines in May.

That’s when it learned that the country’s Supreme Court had annulled its rights at the two copper mines. The Supreme Court decision came out of a challenge by the country’s state-owned miner SODIMICO.

SODIMICO’s case was based on the fact that back in 2000 the then Minister of Mines revoked SODIMICO’s exploration and exploitation rights for Frontier and Lonshi and turned them over to another company, where they were eventually acquired by First Quantum.

The court agreed that the licences should be returned to SODIMICO – a decision which First Quantum says is a clear retaliation for its international arbitration case against the government for its handling of the Kolwezi affair.

Supporting First Quantum’s contention is the unusualness of the court proceedings which went on without First Quantum even being made aware.

The company had invested $750 million in Kolwezi and some $300 million in Frontier.

While it continues to mine at Frontier – the government has yet to force a shutdown – it has cut back on investing in the mine.

The result is a drop in copper production in the quarter and for the rest of the year as First Quantum lowered its guidance for the year by 6.5% to 360,000 tonnes.

Making up for some of that loss was increased gold production. Output of the yellow metal climbed by 27% to 51,400 oz. thanks to more output from operations in Zambia and Mauritania.

In Toronto on July 20 the company’s shares were up $1.44 or 2% to $62.41 on 917,000 shares traded.