Anglo American and its associated companies are facing a $3-billion lawsuit in the United States after allegations that it “interfered” in a tender already awarded to another mining company in the Democratic Republic of Congo’s fabulously rich copper belt.
On Wednesday, the Arkansas-based junior mining company America Mineral Fields (AMF) filed the damages suit against Anglo, De Beers and Minorco in a Dallas, Texas, court. This came a week after Congo authorities announced they had cancelled a tender awarded to AMF to reclaim copper and cobalt mine dumps at Kolwezi in the Katanga province estimated to be worth $10-billion.
Many analysts agree Congo President Laurent Kabila’s handling of the matter has damaged investor confidence in his country, reinforcing the image of a government inexperienced in economic matters. Kabila’s rebel alliance awarded the tender to AMF last April – a month before the rebels ousted dictator Mobutu Sese Seko and swept to power in Kinshasa.
The relationship between AMF and Anglo – who formed a partnership when Mobutu’s government first invited tenders – soured towards the end of 1996 when AMF decided to go it alone. The companies bid separately.
This stood AMF in good stead with Kabila’s soon-to-be-victorious forces in early 1997: the rebels were thought to favour AMF because of Anglo’s long-standing relationship with Mobutu’s government.
AMF made no secret of its material support to Kabila during his campaign. Anglo, in turn, hinted it doubted the validity of a tender award by a rebel movement.
AMF chief executive Simon Brownlie said in a statement on Wednesday that his company believed Anglo “has for some time orchestrated a well-financed campaign to interfere with the company’s projects in the Democratic Republic of Congo”.
AMF’s suspicions about Anglo appear to have been raised by a letter dated August 7 – a copy of which is in the Mail & Guardian’s possession – from Bobby Danchin, president of Anglo’s New Mining Business Division, to Congo’s Minister of Mining Kambale Kabila Mututulo.
The letter states: “We learnt … that the Kolwezi project has not yet been definitely assigned and Anglo American New Mining Business Division wishes to have the opportunity to present an alternative offer to the government. We will be delighted to meet in Kinshasa to discuss the matter.”
The letter was also marked for the attention of Victor Mpoyo, who has recently been promoted in a Cabinet reshuffle by Kabila to the super-portfolio of minister of state responsible, among other things, for the economy.
Mpoyo is related to Kalaa Mpinga, an Anglo director and business development manager in Danchin’s division. Mpinga, who is Congolese, has been intimately involved in Anglo’s ventures in his home country.
Anglo communications manager Glen Finnegan this week confirmed the contents of the letter, but said it had to be seen “in context. It was a letter to seek clarity on the award of the tender. Then we got the reply that AMF had been selected. We simply stood back then.”
She said Anglo would not comment on the court challenge, pending consultations with its lawyers in the US, but added that the company denied interfering with AMF’s interests and that it had no remaining interest in the Kolwezi reclamation project.
Finnegan added that Anglo was now tendering, as part of a consortium involving Belgium’s Union Minire, for the unrelated Kolwezi Group West mining rehabilitation project. It was a larger and more capital-intensive operation, and Anglo would have its hands full with that alone.
Before news of the court challenge, sources close to Anglo claimed Anglo’s decision to abandon interest in the Kolwezi tailings project was also partly related to Anglo’s realisation that such interest could open the door to legal action from AMF.
Congo’s state-owned mining company, Gecamines, announced the cancellation of the tender award to AMF last week saying the original process had been flawed – and that it wanted more cash. A communiqu said “new arrangements” would be made, presumably meaning that the tender process would be reopened. Gecamines would have been AMF’s joint venture partner in the Kolwezi reclamation project.
It is understood Kabila’s government has been squeezing AMF for some time to pay more for Kolwezi. Mpoyo is alleged to have demanded an upfront payment of about $150- million from AMF, which the company refused.
After Kabila came to power, he never ratified the original tender award, as required by Congolese law. But AMF appeared secure in its title anyway: the company has sunk millions of dollars into feasibility studies and preparatory work already.
Some analysts judge that if AMF succeeds in establishing jurisdiction in Texas, and the suit goes ahead, the odds will be stacked heavily against the Arkansas company.
Investec Securities Africa analyst John Clemmow said Anglo had little to answer for, as Kabila never ratified the original agreement, which was entered into by a rebel movement that had not formally taken power. Legal opinion appeared to go against the validity of the contract, he said.
But, warned mining expert Humphrey Harrison: “If [AMF] can establish jurisdiction, then any two-bit lawyer can make enough of a problem for Anglo to make it want to settle out of court … What has AMF got to lose in a judicial system where lawyers go on success fees?”