First Quantum settles mining project dispute with ENRC and DRC
by Practical Law
Kamal Shah (Partner), Stephenson Harwood
In January 2012, Canadian mining company, First Quantum Minerals (FQM), reached a global settlement with London-based Kazakhstan mining company, Eurasian Natural Resources Corporation Limited (ENRC), over the US$2 billion legal dispute involving Kolwezi copper project in the Democratic Republic of Congo (DRC). FQM agreed to a US$1.25 billion settlement. In exchange, ENRC will acquire the Kolwezi projects, including the Frontier and Loshi mines in the Katanga province.
In 2009, the DRC government seized control of the Kolwezi project from FQM citing mining code violations, prompting FQM to launch ICC arbitration against the state mining company, Gecamines, in 2010. The project was sold by the state to Dan Gertler, a mining entrepreneur, who then sold it on to ENRC. ICSID proceedings were also brought against the state for withdrawing its Frontier mine permit.
In September 2010, FQM initiated a US$2 billion legal claim against ENRC in the British Virgin Island (BVI) Commercial Court, alleging that ENRC connived with the state to expropriate the project. Congo Minerals Development limited (CMD), a subsidiary of FQM, filed the claim in the BVI court against Highwinds Properties Limited, a subsidiary of ENRC, claiming inducement of breach of contract and interference with contractual relations and property rights. Although Highwinds filed an application to summarily dismiss the claim, it was rejected by the court.