MiedziCopper loses concessions in Poland – by Northern Miner (August 13, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. 

Ross Beaty isn’t the type of businessman who normally airs his grievances in public. But when two of his copper concessions in Poland were apparently revoked by the Polish government, he felt he had no choice.

On July 30 Poland’s Minister of the Environment revoked two concessions awarded to MiedziCopper, a private copper exploration company in which Beaty’s Lumina Capital investment group has a large stake. The ministry also cancelled a third concession that it awarded to MiedziCopper’s rival KGHM Polska Miedzi (WSE: KGH), Poland’s largest copper producer and a company in which the government owns 63.6 million shares or about 31.79% of the share capital.

Beaty alleges that KGHM brought political pressure to bear on the Ministry of Environment to reverse its decision awarding two of the concessions to his group and MiedziCopper is now suspending all new investment in Poland.

MiedziCopper has invested about $35 million on exploration in the country since 2010 and had planned to spend a further $65 million over the next few years. The company continues to hold 11 concessions in the country on which it has carried out extensive geochemical, geophysical, geological and drilling activities.

“When a company is granted a concession you can’t just revoke it for spurious reasons, which is what the government has done in responding to pressure from KGHM,” Beaty says in a telephone interview from his office in Vancouver. “They revoked the concessions saying they were not in the public interest, which doesn’t make sense.”

“It’s so obvious they’re not playing by what you would call international rules of fair and transparent treatment. We have a desire to continue to explore for copper in Poland but the end remedy is just to leave the country and write off our investment and go somewhere we can be fairly treated … when you work in a country where you can’t trust its laws, it’s just like working in Russia. How the Polish government feels there can be any benefit from what they have done here is beyond me.”

The roots of the conflict began more than 18 months ago when MiedziCopper applied for three concessions in southwestern Poland and KGHM applied for two concessions-some of which overlapped the same ground.

After a lengthy decision-making process, Poland’s Ministry of Environment ruled that two of the three concessions MiedziCopper applied for (Bytom Odrzanski and Kotla) should be awarded to the Canadian company and one of the two concessions that KGHM had applied for (Kulow Luboszyce) should be granted to the Polish company.

KGHM appealed the award of the two concessions to MiedziCopper and the Canadian company then followed suit with an appeal of its own against the decision rejecting its application for the third concession. That concession, which it called Niechlow, was part of the Kulow Luboszyce concession that the ministry awarded to KGHM.

In a letter to Derek White, president and chief executive of KGHM International (the Vancouver-based wholly owned subsidiary of KGHM Polska Miedz that acquired Canada’s Quadra FNX in 2012), Beaty charged that the parent company “urged through its contacts in the Ministry of Treasury the appointment by the government of an investigation by Poland’s internal security agency and has engaged in some very heavy handed political pressure against us to force the government to revoke the granting of the concessions to us.”

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