South Korean company Samsung C&T has become a collateral victim of the dispute between Belgian company George Forrest International and Congo-Kinshasa’s state mining company, Gécamines. GFI and Gécamines are vying for control of Compagnie Minière du Sud Katanga’s copper and cobalt mines at Luiswishi and Luisha in Katanga Province. Kinshasa’s Cour Suprême will rule on the dispute on 15 October.
GFI subsidiary Entreprise Generale Malta Forrest and Gécamines formed the Compagnie Minière du Sud Katanga to run the Katanga mines. Trouble between the partners began when GFI President George Arthur Forrest offered to purchase his EGMF subsidiary’s 60% stake in the joint venture as a guarantee for new debt financing. When Gécamines, which owns the remaining 40% of CMSK, got wind of these plans, it went on the offensive. On 1 July, Gécamines announced that it would exercise its pre-emption rights and buy the 60% stake itself, for US$15 million. It then asked the Tribunal de Commerce de Lubumbashi to ratify the transfer on 13 August.
On 24 August, GFI struck back, bringing a complaint before the Cour Internationale d’Arbitrage at the Chambre Internationale de Commerce de Paris and before Kinshasa’s Cour Suprême. Forrest argues that as an associate of EGMF, his proposed purchase of the stake would not be a third-party sale and therefore Gécamines cannot invoke its right of first refusal. In an atttempt to end the dispute, EGMF denied it had ever intended to sell to Forrest in the first place. Spokesman Henry de Harenne accused Gécamines of attempting to force the sale. The Assemblée Provinciale du Katanga has since early September tried to mediate, but to little effect.
Until the row is resolved, Samsung C&T’s plans to finance a $250-mn. copper and cobalt plant for CMSK are left hanging. This was one of the projects touted as the most promising during South Korean President Lee Myung-bak’s visit to Kinshasa in July, when he met President Joseph Kabila. On that occasion, the Kinshasa representative of the Korea Resources Corporation, Park Jong-geun, announced that KORES and Samsung had signed a deal with GFI on possible investments in copper and cobalt production. All might not be lost for KORES, which signed its own partnership with Gécamines in July (AAC Vol 4 No 9).
Another project which depends on the resolution of the conflict is the rehabilitation of the dams at Koni (42 megawatts) and Mwandingusha (68 MW). Built in the 1950s, they are due to be rehabilitated by GFI and Alfonso Rowemberg Korea in partnership with the Korean Water Resources Corporation (AAC Vol 2 No 5). The uncertainty is even more troublesome since mining companies in Katanga already face huge challenges in ensuring sufficient, stable power supplies.
Other Korean partners of Congolese parastatals will watch developments closely. These include Taejoo Synthesis Steel, which signed a partnership agreement with the Société de Développment Industriel et Minier du Congo, and Korea National Oil Corporation, which plans to work with Congolaise des Hydrocarbures (AAC Vol 3 No 8). KNOC is pursuing the rights to the next oil block on offer—Block 4 in Albertine Graben, also sought by Italy’s ENI. During a visit in September 2010, KNOC Chief Executive Officer Kang Yong-won expressed interest in Block 4 and others in Cuvette Centrale and the Lake Tanganyika Graben.