IKN

Ivanhoe
Mines (IVN.to): Once again this Friedland company is making the biggest news splashes
in the exploration copper sector, but this time for a deal that can easily be
called controversial. I’m a little late to this due to the travels and that,
but I’d like to say something today because this issue got a few of our juices
flowing last week. I shall explain.

On November 18^th IVN
announced (9) that it and its partner Zijin were giving an extra 15% of the
Kamoa-Kakula copper project to the host country, the Democratic Republic of
Congo (DRC) (insert irony joke), bringing its participation to 20% (with Zijin
and IVN on 40% each, give or take a tenth or so). This report (10) in Mining
Journal gives the Robert Friedland polished quote space

“This is a historically significant event for the people of
the Democratic Republic of Congo,” he said. 

“We now are united as partners committed to working closely
together toward our shared objective of ensuring that the major copper
discoveries we have made at Kamoa and Kakula during the past eight years can be
predictably, efficiently and expeditiously developed into a world-scale mining
venture with a lifespan of multiple generations.”

But the grumblings and rumblings
got louder, so on Monday November 28^th (i.e. last week) IVN held a
Conference Call (11) to explain about recent company developments and it was
one of the phrases used by the company in the CC, about how the deal to hand
over this large slug of Kamoa-Kakula would “safeguard” its future, that got the
hackles up of certain people a little group to which your humble scribe
belongs, a bunch of five or six reprobates who can collectively be called
“mining professionals” (even I just about scrape in on that qualification these
days). It started with one of them sending a group mail entitled “DRC Rolls
Friedland”, it continued after November 28^th with another asking the
difference between this deal and a bribe (e.g. “no 20%, no permits”), then IVN
was semi-defended by a couple of others on the string. I’m not in a position to
quote any of my friends but I can reproduce here my additions to the debate.
Here’s the first (grammar brushed up very slightly)

“Aside
from any precedent set, this deal doesn’t safeguard a thing inside IVN’s suite
of assets in DRC, including the one that’s just been safeguarded. 

There is a difference between a bribe for a specific
permit or “consultancy fee” and this, because the DRC
“safeguard” is legal, but only because the country makes the laws! [Name]
is 100% correct, this is a shakedown, extortion, blackmail, call it what you
will. And if there’s one constant about blackmailers over the course of history,
it’s that they’ll never just shake you down once; when on the hook the victim
will pay, pay and pay again.”

In other words, I too believe DRC
is taking “Resource Nationalism” to a whole new level. The subject then turned
to the difference between “legal” and “illegal” bribery, for example the US
lobbying system in which it’s perfectly legal to give a large sum of money to a
politician and in return expect tacit support for your cause. The thing is,
what’s going on in DRC now isn’t mere bribery, it is in my opinion blackmail
and I tried to make the distinction in a later mail to the group:

“I absolutely agree with your lobby group
argument. However, there is a difference between common or garden corruption be
it illegal (a million in banknotes for a permit) or legal (election campaign
donation from NRA) and outright blackmail be it illegal ($20,000 or I tell your
wife) or legal (DRC “safeguard”). The premise of blackmail is
different, it’s the threat of removing the asset from your life permanently
(wife, copper project) if you don’t do as I say. It’s very different.”

Now be clear, mine is just one
opinion and the others in the experienced groupette of mining people either
agree with all, some or none of my position depending on their taste. But the
episode recently recorded by IVN in DRC, and then watching the way it got spun
by IVN to make it sound like a wonderful step forward instead of what it truly
is, legalized theft, is another in the set of reasons why I prefer not to be
exposed to that country.