Small Talk: Miners in DRC hope for end to licence chaos

February is set to be a crucial month for the miners operating in the Democratic Republic of Congo, as the controversial issue of government licences comes to a head.

Companies mining in the DRC, some of which are listed on London's AIM, were thrown into disarray last year when the government announced all of the contracts issued by a previous administration were illegal. One minister said last week: "We cannot simply accept, without challenge, the portfolio of flawed contracts we inherited."

The current DRC government set up a commission to investigate the licences several months ago. It announced last week that all companies affected would learn of its findings and proposed remedies by 20 February after the "fast track" review. Those groups also have a chance to appeal against any decision after they learn the outcome of the investigation to a specially created panel.

The issue emerged last year around the time Central African Mining and Exploration had its licences withdrawn in the Katanga region of the country, sending its share price plummeting. The management and the wider market were taken by surprise, with some conspiracy theorists suggesting that the move had been made to scupper Camec's takeover bid for Katanga Mining. The all-share bid was holed below the waterline as Camec's value plunged. The DRC said it had withdrawn the licence purely because it was illegal.

Victor Kasongo, vice minister of mines for the DRC, updated the industry in a speech at the Mining Indaba in Cape Town on Tuesday. He denied the government had used the review to settle old scores, or to pick on weak companies, saying: "Actually, the point was simple: We all need the mining contract system in the DRC to be legal, and we needed to act to make it legal, fair and active as quickly as we could." The government said it wants to weed out those contracts that are not only illegally structured but exploit the DRC. It also wants to bring those contracts that are "imperfect but otherwise desirable" up to reasonable standards.

Mr Kasongo said the government was caught by surprise by the scale of the problem. Currently 60 contracts are under review, with the commission scrutinising legal, fiscal, technical, environment and social issues.

Mr Kasongo said the DRC was looking to work with parties "who have demonstrated good faith and best practice in their investments in the DRC, and who have delivered on their commitments".

Separately, Camec announced it had strengthened its ties with Dan Gertler, a big investor in the region through his company Prairie International, after agreeing to create a joint venture last year.

Victoria on the up

These are topsy turvy times in the world of fossil fuels. After a forgettable 2007, Victoria Oil & Gas can look forward to a rosier future after news of a successful fund raising and major new shareholders emerged in the past few weeks.

The company announced at the end of January that it had raised £15.25m via a placing. The new principal placee was a special vehicle called Noor Petroleum. Noor is backed by a consortium of investors hailing largely from the United Arab Emirates and led by Falcon Petroleum. It announced last week that it now holds a 29.6 per cent stake in the company. Victoria intends to use the proceeds to develop its assets in Kazakhstan and Western Siberia. Two significant shareholders – GLG Partners and Barclays – reduced their stakes in the group last week.

Victoria has enlisted the services of Blackwatch Petroleum and GeoDynamics Research, an Italian company, to push ahead with the moves in Eastern Europe.