Mining Investors Spooked as African Dispute Payments Multiply – by Thomas Wilson and Thomas Biesheuvel (Bloomberg News – June 28, 2018)

https://www.bloomberg.com/

Miners across Africa are increasingly using one-time payments to settle disputes with governments, a trend that’s disturbing some investors.

A $150 million payment by Glencore Plc’s Katanga Mining Ltd. to the Democratic Republic of Congo’s Gecamines earlier this month followed Freeport McMoRan Inc.’s separate $100 million settlement with the state-owned company in January 2017. Last October, Barrick Gold Corp. proposed paying Tanzania $300 million as part of efforts to negotiate a settlement for its majority-owned Acacia Mining Plc.

The shift, identified by the Extractive Industries Transparency Initiative — which promotes good governance in the mining industry — comes as African nations seek redress from old contracts often perceived to favor international miners.

While there’s no suggestion such settlements breach any rules, some investors are concerned that certain payments are poorly defined and fall at the boundaries of existing regulations.

“We are nervous about bespoke deals,” said Nick Stansbury, a fund manager at Legal & General Investment Management in London. “If a company is having to negotiate a number of one-off settlements with governments, that might be indicative that they are operating at the very margins of what is permitted under a statutory framework.

For the rest of this article: https://www.bloomberg.com/news/articles/2018-06-28/mining-investors-spooked-as-african-dispute-payments-multiply