Africa update
Published by MAC on 2007-09-10
Africa update
10th September 2007
As UK mining bucaneer and ex-cricketer, Phil Edmunds, is forced to abandon his takeover bid for DRC's Katanga Mining, so the hawks begin to hover …
One of the world's largest sources of uranium, Niger is also one of the world's most impoverished states. In recent months, the government has accused Areva (which formerly included Cogema) of backing a Tuareg rebel movement. Just over a week ago, citizens demanded that the French company be forced to leave.
However, numerous other uranium mining outfits, from China, India, South Africa and the US, are lining up to take Areva's place, while conditions at the mines remain parlous for workers and neighbouring citizens.
Anglo American eyes miner as Edmonds abandons bid
Ben Laurance, Sunday Times
10th September 2007
ANGLO AMERICAN, the minerals conglomerate, is emerging as a likely buyer of mining group Katanga after former England cricketer Phil Edmonds dropped his bid for the group, according to sources close to the situation.
Edmonds's company, Camec, abandoned its bid last week after its main mining licence in the Democratic Republic of Congo (DRC) was withdrawn by the Kinshasa government.
Camec's share price immediately slumped.
When Camec first mooted its bid for Katanga it valued the copper and cobalt producer at more than £700m.
Once Camec signalled its intention to bid, Katanga in effect invited offers from other companies. As a result, a number of groups have since looked at its books.
And now, despite the withdrawal of Camec's offer, Katanga is continuing to press ahead with plans for a possible sale.
Anglo American, headed for the past six months by American Cynthia Carroll, has emerged as the frontrunner to buy Katanga, and is understood to be carrying out due diligence.
People within Katanga believe that a deal could be concluded by the end of this month.
It is likely to be in the form of a full takeover or a deal under which an outsider takes a stake in the company's huge copper and cobalt mining project in the southern DRC, due to come on stream at the end of this year.
Among the other mining groups understood to be looking at Katanga is BHP Billiton, which already has large mining interests in the DRC and is seen as a strong contender.
Sources close to Xstrata, the Swiss-based mining group, have indicated that the company is too busy with new projects in the Philippines, Peru and Papua New Guinea to bid for Katanga, while Rio Tinto is currently in the throes of a £15 billion takeover of Alcan of Canada.
Katanga has also opened its books to Nikanor, which operates a mine near the Katanga project. RP Capital, a fund that owns 13% of Nikanor, also has a stake in Katanga and is keen to engineer a merger of the two businesses.
Copper deposits in central and west Africa are seen as highly attractive to mining companies because they are of a far higher grade than those in most other parts of the world.
But investment in the DRC has been seen as risky because of the constant threat of political upheaval.
Camec's mining licences were revoked after the DRC's attorney-general said there were "serious irregularities in the original issuing of the licences".
The DRC concessions have until now accounted for most of Camec's income.
In July, when Camec first said it would bid for Katanga, the company's share price peaked at 76p. It closed on Friday at 28p. Camec said it would appeal against the withdrawal of its licences.
BHP in running for Congo copper mine
Felicity Williams, Herald Sun
10th September 2007
BHP Billiton is a "strong contender" to acquire Africa's third largest copper resource, according to British newspaper reports.
The world's biggest mining company is running a ruler over Canadian-owned Katanga, the majority owner of the Kolwezi copper-cobalt mine complex in the Democratic Republic of Congo, Britain's Sunday Times newspaper reported yesterday.
However, BHP Billiton was just one of the potential suitors eyeing Katanga, with fellow mining giant Anglo American emerging as the most likely buyer, the report said.
Camec, a London-listed miner that owns copper-cobalt assets in DR Congo, kicked off the battle for Katanga when it launched a pound stg. 720 million ($A1.7 billion) hostile bid for the company in August.
Katanga responded by inviting offers from other companies.
Camec was forced to withdraw its bid last week, after the DR Congo Government revoked its main mining licence in the country.
But Katanga has continued to pursue a potential sale, even though Camec's offer is no longer on the table.
BHP Billiton is seen as a strong contender to acquire Katanga, but Anglo American has now emerged as the most likely buyer.
Sources close to Swiss-based miner Xstrata believe the company is too busy with new projects in the Philippines, Peru and New Guinea to bid for Katanga, while Rio Tinto is currently occupied with its $US40 billion ($A48.87 billion) acquisition of Canadian aluminium producer Alcan, the report said.
Toronto-listed, London-based Katanga owns 75 per cent of the Kolwezi mine complex.
The DR Congo's state-owned mining company, Gecamines, holds the remaining 25 per cent.
The joint venture partners are currently conducting a four-year rehabilitation program at the Kolwezi complex, after it was allowed to flood in 1998 due to lack of funds.
The complex, in the Congolese copper belt about 300km from the country's second-biggest city, Lubumbashi, is set to ship its first copper in December and is expected to reach full production in 2011.
The mine site covers 15,000ha and Katanga says total reserves and resources stand at 200 million tonnes of ore with an average copper grade of 3.5 per cent.
Once fully operational, Kolwezi will produce 150,000 tonnes of copper and 8000 tonnes of cobalt a year.
Because exploration has not been carried out at the site since the early 1980s, there is also significant potential for new discoveries, according to Katanga.
The average cost of producing a pound of copper at the mine is US20, making it the world's sixth-lowest-cost copper producer, the company has calculated.
The mine complex has an estimated lifespan of 40-plus years.
In the 1980s DR Congo's copper output amounted to about 7 per cent of global production.
Since the early 1990s, however, DR Congo's copper production has gradually declined, amid widespread social and political unrest
Marchers Demand That French Mining Company Leave Niger
By Phuong Tran, Dakar
8th September 2007
http://www.voanews.com/english/2007-09-08-voa28.cfm
Civil society groups are marching in Niger's capital Saturday to demand that the French nuclear energy company, Areva, quit mining Niger's uranium. The march comes after months of government accusations that the company is supporting a rebellion in the northeast uranium rich Agadez region. But watchdog groups say the company's exit will not end the violence or improve Niger's troubled mining sector.
Phuong Tran has more from VOA's West Africa Bureau in Dakar.
March organizer, Nouhou Arzika, president of the newly-formed Citizen's Movement for Peace and Democracy, says the French company Areva is an enemy of the state.
He says Areva should leave because it is supporting the rebellion and hiring mercenaries to help the rebels plant landmines. Earlier this year, Tuareg fighters in Niger's mineral-rich northeast renewed a decade-old rebellion to demand more royalties from uranium mining, a big source of Niger's revenue.
Government officials have accused Areva, the world's largest nuclear power firm which has had a four-decade lock on Niger's uranium mining, of funding the rebels in order to frighten off rival firms.
The Niger government recently lifted Areva's monopoly after expelling the company's local manager.
Rebel leaders and Areva have denied the rebel-funding allegations. The company has since increased the fees it pays the government and has pledged to improve mining practices, which lawyers say are harmful to the miners and the environment.
Niger's mining sector is not only tainted by accusations of harmful practices. There are also allegations of corruption.
Ali Idrissa is national coordinator of a watchdog group that tracks Niger's compliance with the global Extractive Industries Transparency Initiative, administered by the World Bank.
The initiative is a voluntary effort by mineral-rich countries to improve mineral and oil revenue tracking. Niger signed on two years ago and is in the process of deciding how best to comply.
The watchdog coordinator says rather than asking Areva to leave, the government should increase Areva's mining fees and publish the royalties.
Idrissa says if Areva does not exploit the reserves, another company will. And Niger will face the same problem of mineral wealth leaving the country.
Niger recently granted 30 prospecting and mining contracts to other countries, including China, South Africa and the United States.
The transparency group questions how the Niger government has spent an estimated $600 million in uranium mining royalties over 40 years.
The Secretary General of the Ministry of Mining and Energy, Abdoul Razack, defends Niger's handling of the revenues. Razack denies rebel allegations that the government has funneled mining revenues into weapons and fighter planes. He adds that since 2005 the ministry has made its revenues publicly available, and will continue to do so.
Despite being the world's third largest producer of uranium with almost 10 percent of the market, Niger has the worst living conditions in the world, according to the United Nations.
The government recently declared a state of alert in the northeast.
At least 40 government soldiers have died in rebel attacks over the past seven months in the northeast. Tuareg fighters have also taken almost 40 people hostage. The government has refused to negotiate with the rebels until they end their violence. .