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05 Dec 2021

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Sundance Resources Serves Dispute Notice To Cameroon 

Sundance Resources Serves Dispute Notice To Cameroon

Business in Cameroon

Australian mining company Sundance Resources (which is currently developing the Mbalam iron ore project) published a market update informing that it served a notice of dispute to Congo and Cameroon, the two countries that host the said project.  

It also informed that it has hired experienced international conflict lawyer Clifford Chance to defend its interests.  

In the case of Cameroon, the dispute notice was served because the country issued an implementation decree granting an exploitation permit to Cam Iron (Sundance Resources subsidiary), thus breaching the transition agreement of June 30, 2015.  

“In accordance with the Cameroon Mining Code (2001), Sundance’s subsidiary Cam Iron  applied for an exploitation permit on 9 October 2009. The Minister did not reject or otherwise process Cam Iron’s exploitation permit application within the 90-day time limit prescribed by Article 22 of the Regulations to the Mining Code. As a result, Cam Iron’s application for an exploitation permit is deemed to have been granted,” Sundance Resources writes, claiming to base its arguments on the mining code applicable at the time of signature in Cameroon (ed. note: the code has been amended already).

“However, to perfect the exploitation permit that Cam Iron was deemed granted under Article 22 of the Regulations to the Mining Code, an implementing decree must be issued by the President of Cameroon. No such implementing decree has been issued for Cam Iron’s exploitation permitBy failing to issue the implementing decree, Sundance considers that Cameroon has breached certain obligations owed to Sundance and Cam Iron under the Transition Agreement dated 30 June 2015, including Cameroon’s obligation to do all things reasonably required of it to effect, perfect or complete the transactions contemplated by the Transition Agreement,” it continues.

Pursuant to the transition agreement of June 2015, which provides“disputes to be resolved by a 60-day process of negotiation and, failing that, results in arbitration under the ICC Rules before a three-member tribunal seated in Paris,” Sundance thus officially initiates the dispute procedure against Cameroon on the Mbalam iron ore project.

Collaboration with a consortium of Chinese state-owned companies

Let’s note that the dispute procedure is issued barely days after Cameroon’s Minister of Mines announced that the country would collaborate with a consortium of five Chinese state-owned companies” for the development of the Mbalam mining project.  

Indeed, earlier this month, while reviewing the 2021 budget of his ministry, he announced that the government would finalize the procedures for the selection of technical and financial partners for the operation of the mine, the construction of the railway, and the construction of the mineral terminal.

He also revealed that the country would complete processes for the selection of partners who will buy the iron ore from the Mbalam mine in Cameroon and Nabeba in Congo. The Minister did not provide any detail but just announced a future collaboration with a “consortium of five Chinese state-owned companies” to launch the mining project that has been stalling for years now.

Indeed, since 2015 (after numerous extension of its exploitation license on the project), Sundance Resources is unable to hook a technical and financial partner for the construction of the infrastructure related to the project (construction of a 500-km railway between Mbalam and  Kribi, and the mine and a tanker terminal at the Kribi deep seaport).  

Successive attempts with the Chinese companies China Gezhouba (in 2015), Tidfore Heavy Equipment Group Ltd (in 2018), and AustSino (2018) have all proven unsuccessful.

Officially, these Chinese partners approached by Sundance claimed the world iron prices to be discouraging for investment in new projects despite their interests in the Mbalam deposit. However, some sources close to the case think that the partnerships were unsuccessful because of some conditions set by Chinese parties.  

According to the sources, the Chinese partners wanted to take total control of the project, by dismissing Sundance Resources. Has the Cameroonian government (which recently created a  state-owned mining company) finally opted for such a scenario? There is no telling currently.

But, on July 1, 2015, due to Sundance’s difficulties in finding financial partners for the project, Cameroon had already announced that it would take over the infrastructure part of the mining project. The announcement was made a day after then Prime Minister Philemon Yang’s visit to Beijing (June 19, 2015).

During this trip, Philemon Yang received (according to authorized sources) the promise of Chinese financing for the exploitation of the iron deposit of Mbalam, located in the forest and mining region of Eastern Cameroon

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