Sundance set to start proceedings against Congo iron ore license withdrawal

London — ASX-listed mine developer Sundance Resources Limited, which is developing a major iron ore mine project in the Central African Republic of Congo, said Dec. 16 it may commence international arbitration proceedings following the apparent revocation of its license by the country's government to proceed with development of the project.

Sundance said in a statement to the Australian Securities Exchange that it became aware Dec. 7 that the Republic of Congo, also called Congo-Brazzaville, had issued a decree Nov. 30 purporting to withdraw the mining permit from Sundance's subsidiary Congo Iron.

As a result of the withdrawal of the mining permit, Sundance considers that Congo has breached numerous provisions of the Mining Convention dated July 24, 2014 between Congo and Congo Iron, and indicated that the withdrawal is tantamount to an expropriation of the assets of Congo Iron.

Sundance said it has already invested close to AUS$400 million ($302.6 million) in the project which targets an eventual production of 40 million mt/year of high-grade iron ore.

S&P Global Platts was unable Dec.16 to solicit a response on the subject from the country's Mines Ministry via an official website.

Other regional confiscations

The incident follows the apparent recent confiscation by the Sierra Leone government of iron ore mining licenses for mine properties held in the west African nation by global trader Gerald Group and China's Shandong Iron & Steel.

"Congo Iron is now commencing the formal dispute resolution process provided for in the Convention. In the event the dispute resolution process does not achieve a settlement within 60 days, Congo Iron intends to commence international arbitration proceedings pursuant to Article 33 of the Convention," Sundance said in the ASX statement.

These proceedings will be conducted under the rules of arbitration of the International Chamber of Commerce (ICC) before a tribunal of three arbitrators seated in London, the company said. Congo Iron will seek the payment by Congo of fair compensation for the expropriation of the mining permit and damages for other breaches of the Convention and the applicable law, it said.