| Thu 31 Oct 2002, 17:41 | | KUMBA RESOURCES REJECTS UN ALLEGATIONS |
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KUMBA RESOURCES REJECTS UN ALLEGATIONS
Kumba Resources Limited (`Kumba`), the mining division of Iscor which was
unbundled into a separately-listed company, Kumba Resources, in November 2001,
has categorically denied UN allegations that the company has violated ethical,
transparency or human rights guidelines set by the Organisation for Economic Co-
operation and Development (`OECD`) in the course of its activities in the
Democratic Republic of Congo (`DRC`).
Iscor and Zincor (formerly a wholly-owned subsidiary of Iscor and now of Kumba),
are among 85 South African and international companies listed as being "in
violation of the OECD Guidelines for Multinational Enterprises" in a UN report
on the "Illegal Exploitation of Natural Resources and Other Forms of Wealth of
the DRC".
"Kumba, being the successor in title to Iscor`s relevant mineral rights and
responsibilities in the DRC, objects in the strongest terms to the inclusion of
Iscor and Zincor in the list, without any attempt being made by the authors of
the report to substantiate or explain their reasons for doing so. Neither Kumba
nor Zincor has been granted the opportunity to respond to these allegations.
Kumba and its legal team will be communicating with the UN panel responsible for
the report to clarify the allegations," said Richard Wadley, Kumba`s executive
director for strategy and business development.
According to Wadley, the mining division of Iscor, now vested in Kumba, has
always insisted on adherence to the same rigorous code of ethics in the DRC that
it requires of its activities elsewhere in the world.
"Kumba is driven by a deeply-entrenched value system that will not countenance
any improper or dishonourable business conduct by its representatives. The
company is at pains to comply fully with all international and local laws,
regulations and conventions regarding ethical investment and other business
practices and is not aware of any instance where these have been breached," said
Wadley.
"On the contrary, Kumba strongly favours any action taken to counter corruption,
a scourge that leads inevitably to the plundering of a country`s natural
resources and other forms of wealth to the detriment of its people. The recent
study by a panel of experts on behalf of the
UN Security Council into the illegal exploitation of mineral resources in the
DRC is a commendable effort to address the problems afflicting that country; it
is all the more unfortunate, therefore, that the report of that study contains
serious false allegations against responsible companies such as Kumba that can
only detract from the credibility and impact of the study."
Wadley said that neither Kumba (or its predecessor, Iscor Mining) nor Zincor has
ever been actively involved in any mining activities in the DRC, but only in
negotiations for the rehabilitation of two existing mines, Kipushi and Kamoto,
which are owned by the DRC state mining company, Gcamines. In respect of the
Kamoto copper-cobalt underground mine, Iscor Mining entered into an arm`s-length
agreement in 1998 with Gcamines, in close co-operation with the then government
of the DRC.
Kumba holds a presidential decree to participate in the rehabilitation of Kamoto
with Gcamines. In terms of this agreement, Kumba will provide financing for the
rehabilitation of the mine and take responsibility for its management for an
initial ten-year period, in return for a relatively low percentage of the
profit.
Following the outbreak of civil war in the DRC shortly after the agreement was
concluded, financing of the project became impossible to achieve, although a
feasibility study was concluded by Kumba at its expense. Kumba`s total
expenditure in project-related funding in the DRC amounts to some US$8 million,
which includes the feasibility study for the Kamoto mine, the running of an
office in the DRC, various tender submissions and the provision of plant and
equipment to the value of US$1,5 million to Gcamines. To date, Kumba has not
received any revenue or product from Kamoto in return for its investment in the
property.
Kumba also supported Gcamines to enable limited mining operations at Kamoto to
continue under Gcamines` management. These have continued sporadically
throughout the civil war, necessitating a revision of the feasibility study. In
addition, the current DRC government has adopted a new, progressive mining code
with the assistance and encouragement of the World Bank. Kumba has informed
Gcamines and the DRC government of the need to review certain aspects of the
agreement governing the redevelopment of Kamoto in order to ensure alignment
with the new mining code.
Zincor has never had any operations in the DRC whatsoever, but aspires to be
involved in the rehabilitation of the Kipushi zinc mine in partnership with
America Mineral Fields Incorporated (`AMFI`). Kipushi, which is also owned by
Gcamines, has been preserved on a care-and-maintenance basis by its owner,
pending a return to stability in the DRC that would facilitate the financing of
the mine`s refurbishment.
The South African government has been kept fully informed of Kumba`s involvement
in the DRC and has given the company its full co-operation throughout. The
Industrial Development Corporation (IDC), the SA government agency responsible
for providing project development finance, has also been kept fully briefed and
has indicated its interest in principle in participating in both projects once
conditions in the country have improved.
ends
Note
Kumba Resources Ltd, one of the largest South African-based mining companies
listed on the JSE Securities Exchange, is a focused metals and mining company
with a diverse commodity portfolio consisting of iron ore, heavy minerals, coal,
base metals and industrial minerals. www.kumbaresources.com
Contact:
Richard Wadley
Executive Director Strategy and Business Development
Tel 012 - 307 3397
Telephone : + 27 (12) 307 4561 P.O. Box 9229
Telefax : + 27 (12) 307 4080 PRETORIA 0001
Date: 31/10/2002 05:21:23 PM Produced by the JSE SENS Department
