May 20, 2017 / 11:21 AM / 2 years ago

Zambia, First Quantum seen resolving $1.4 billion dispute in June

LUSAKA (Reuters) - A row that saw a state-owned Zambian company sue Canadian miner First Quantum Minerals (FM.TO) for $1.4 billion is likely to be resolved by June, the southern African nation’s presidency said on Saturday.

First Quantum asked a Zambian court in February to dismiss the suit from Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH), which is 77 percent state-owned and holds minority stakes in most of the country’s copper mines.

Presidential spokesman Amos Chanda told Reuters the finance minister had written to First Quantum and the company agreed to begin talks with the government on May 30.

“Finance Minister Felix Mutati has prescribed that the talks should finish within seven days and a government negotiating team headed by the secretary to the Treasury will be announced soon,” Chanda said.

“First Quantum has informed me that their technical team will attend the negotiations and they are confident that an amicable settlement will be reached,” he said.

President Edgar Lungu called earlier this month for an out-of-court settlement in the case.

Zambia is Africa’s second-largest copper producer and differences with mining companies over taxes, electricity prices, environmental concerns and labor matters often arise.

The $1.4 billion claim by ZCCM-IH includes $228 million in interest on $2.3 billion of loans it claims First Quantum wrongly borrowed from the Kansanshi Copper Mine, as well as 20 percent of the principal amount, or $570 million.

ZCCM-IH said in court papers filed in October that First Quantum used the money as cheap financing for other operations. First Quantum says the loans were at a fair market rate.

Editing by Ed Stoddard and Helen Popper

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