Miner ENRC buys out Gertler in $550 million Congo deal

LONDON Sat Dec 8, 2012 8:13am GMT

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LONDON Dec 8 (Reuters) - Miner ENRC, battling to clean up its governance record, has tightened its control over copper operations in the Democratic Republic of Congo with a $550 million cash deal that ends its links to Israeli businessman Dan Gertler.

Kazakh ENRC -- one of several foreign-owned, London-listed miners to come under fire over governance and transparency -- has been pushing to streamline its structure, clean up its reputation and improve a share price that has underperformed rivals by almost 60 percent over the past two years.

Transparency campaigners including Global Witness have criticised ENRC for using partners in Congo, working through offshore companies, which they say could shelter corrupt local politicians.

Gertler, an influential figure in Congo's mining sector with close links to the Kinshasa government, denies the accusations.

In a statement late on Friday, ENRC said it had agreed to buy the 49.5 percent it does not already own of holding company Camrose Resources, which controls assets including the coveted Kolwezi project and a string of exploration licenses.

It will also buy out outstanding minorities in Camrose subsidiaries.

ENRC found itself at the centre of a debate over expropriated assets two years ago after it bought the first 50.5 percent of Camrose, an offshore holding company that controls Congo's promising Kolwezi copper project. Kolwezi had been owned by Canada's First Quantum until the licence was abruptly revoked in 2009.

ENRC settled with First Quantum in January 2012 and has been negotiating for months to end its partnership with Gertler.

A spokesman for Gertler's Fleurette Group said that, while Friday's deal ended joint interests with ENRC, Gertler would continue to "explore opportunities with other leading players in the sector". Gertler has done copper deals in Congo with companies including Glencore.

ENRC Chairman Mehmet Dalman, who took the top job in February this year and has promoted himself as a "new broom", said the deal was part of ENRC's strategy of consolidating copper and cobalt assets in Africa.

Near-term production potential from the Camrose assets is approximately 100 thousand copper contained tonnes per annum, with capital expenditure in 2013 estimated at some $300 million.

The original Congo deals were part of ENRC's aggressive push to grow beyond its Kazakh, ferrochrome-focused base. The miner has since focused spending on operations that can generate cash most swiftly, and has reined in expansion plans.

The deal will be put to ENRC's shareholders on Dec. 28.

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