DRC Government & Freeport-McMoRan Copper & Gold Inc. Announce Successful Completion of Tenke Fungurume Contract Review Process
22 Oktober 2010 - 11:49AM
Business Wire
The government of the Democratic Republic of Congo (DRC) and
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced today
the successful conclusion of the review of Tenke Fungurume Mining’s
(TFM) contracts. The conclusion of the review process by the DRC
government confirms that the Tenke Fungurume contracts are in good
standing, and acknowledges the parties’ continuing commitment to
the rights and benefits granted under the existing TFM
contracts.
In connection with the review, the parties will incorporate
clarifying language that its rights and obligations are governed by
the mining convention. TFM’s key fiscal terms, including a 30%
income tax rate, 2% mining royalty rate and 1% export fee, will
continue to apply and are consistent with the rates in the DRC’s
current Mining Code.
His Excellency the Minister of Mines of the DRC and FCX Chief
Executive Richard Adkerson issued the following joint statement:
“We are pleased to announce completion of the contract revisitation
process for Tenke Fungurume Mining. The parties worked
cooperatively to reach a mutually satisfactory conclusion of the
issues raised during the process. This important milestone
provides the basis for future cooperation and enables TFM to pursue
additional investments to develop this massive project to its full
potential.”
Mr. Adkerson expressed his appreciation to His Excellency the
President of the DRC, His Excellence the Minister of Mines and the
Minister’s staff for their efforts in completing the review.
Mr. Adkerson stated, “We are committed to continuing our
positive partnership with the DRC government and providing
significant benefits to the Congolese people for decades to
come. We look forward to continued development of Tenke
Fungurume into one of the world’s premier copper and cobalt
operations, using world class standards for environmental
management and social programs. The project will provide large and
sustainable benefits associated with employment, infrastructure
development, taxes, royalties and other benefits to the government
and Congolese people over its long life.”
TFM agreed to several additional commitments, including an
increase in Gécamines ownership interest in TFM from 17.5% to 20%;
an additional royalty of $1.2 million for each 100,000 metric
tonnes of proven and probable copper reserves above 2.5 million
metric tonnes; additional payments totaling $30 million to be paid
in six installments upon reaching certain production milestones;
conversion of $50 million in intercompany loans to equity; and a
payment of $5 million for surface area fees. In addition, TFM has
agreed to expand Gécamines’ participation in TFM management and
reiterated its commitment to the use of local services and
Congolese employment. In connection with the agreed modifications,
the parties have agreed to increase the annual interest rate on
advances from the current rate of LIBOR +2% to LIBOR +6%. These
terms have been agreed to by TFM, its shareholders and the DRC
government and will be incorporated into the related
agreements.
The Tenke Fungurume mining concessions are located in the
Katanga province of the DRC approximately 110 miles northwest of
Lubumbashi. Copper production commenced last year on the
approximately $2 billion initial development project, the largest
such capital investment in the DRC in recent years. Current
operations are designed to produce approximately 250 million pounds
of copper and 18 million pounds of cobalt per year and the
operation is currently being expanded to approximately 290 million
pounds of copper per annum starting in 2011. The initial
development project was designed and constructed in world-class
fashion, using leading-edge technology and following international
best practice standards for environmental management, occupational
safety and social responsibility. TFM continues to engage in
drilling activities, exploration analysis and metallurgical testing
and has commenced feasibility studies to evaluate the potential of
this highly prospective mining district that will enable
significant future expansion and enhance the long-term partnership
with Gécamines, the government of the DRC, and the Congolese
people. In the aggregate, through June 30, 2010, tax and related
payments to government institutions, transfer bonuses, and social
spending within the DRC has totaled approximately $370 million
since the project’s inception. TFM estimates more than two-thirds
of the economic benefits from the project remain in the DRC in the
form of taxes, royalties and duties, and the provision of local
services.
FCX is a leading international mining company with headquarters
in Phoenix, Arizona. FCX operates large, long-lived, geographically
diverse assets with significant proven and probable reserves of
copper, gold and molybdenum. FCX has a dynamic portfolio of
operating, expansion and growth projects in the copper industry and
is the world’s largest producer of molybdenum.
The company’s portfolio of assets includes the Grasberg mining
complex, the world’s largest copper and gold mine in terms of
recoverable reserves, significant mining operations in the
Americas, including the large scale Morenci and Safford minerals
districts in North America and the Cerro Verde and El Abra
operations in South America, and the Tenke Fungurume minerals
district in the Democratic Republic of Congo. Additional
information about FCX is available on FCX’s web site at
www.fcx.com.
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