September 19, 2011 / 1:02 PM / 7 years ago

UPDATE 2-First Quantum says court upholds $2 bln Congo claim

* ENRC units had filed to have case dismissed

* ENRC units plan to appeal decision, decline to comment

* First Quantum seeks $2 billion in damages for revoked Congo asset (Adds details, background throughout, ENRC appeal)

LONDON, Sept 19 (Reuters) - A British Virgin Islands court has upheld a $2 billion claim filed by Canada’s First Quantum Minerals over a disputed Congo copper project, rejecting an application from units of Kazakh miner ENRC to dismiss the suit.

ENRC said it plans to appeal the decision, though First Quantum, which filed its claim against the ENRC units last year, said on Monday it expected the case would go to trial.

The ruling late on Friday follows an application from the ENRC units in March to have the case dismissed on grounds of jurisdiction.

The dispute between First Quantum and ENRC over the copper-cobalt project, Kolwezi tailings, has emphasized the difficulties faced by miners as they are pushed into tougher regions by a scarcity of low-cost, high-quality projects, high metal prices and avid demand.

First Quantum held an exploitation licence for Kolwezi until it was revoked by the Democratic Republic of Congo in August 2009 as part of a “revisitation” of mining licences.

ENRC took control of the asset when it bought a majority stake in a holding firm which controlled the British Virgin-islands based firms who own the licence, the Highwinds group, in August 2010.

Kolwezi has been one of the most high-profile examples of resource-hungry miners buying licences expropriated from rivals, just months after Brazil’s Vale bought rights to a Guinea iron ore deposit which had been stripped from Rio Tinto.

ENRC has been fiercely criticised for its decision to buy expropriated assets. Its shares fell 10 percent in the days following the deal.

First Quantum, which says it invested $430 million in the virtually completed copper-cobalt project by the time it was confiscated, said in a statement of claim filed last year that DR Congo and state mining body Gecamines breached their contracts, and argued the asset was revoked as part of a plan.

“Highwinds will need to explain its involvement in the unlawful cancellation of First Quantum’s interest in the Kolwezi Project,” First Quantum said in a statement on Monday.

“In particular, it will need to explain how it came about that it signed a contract to acquire the Kolwezi permit the very same day First Quantum’s contract was cancelled.”

First Quantum is also fighting Kinshasa’s decision to revoke the licence for Kolwezi, along with two other subsequently revoked projects — Frontier and Lonshi — in international courts of arbitration.

The BVI court cannot reinstate the licence. (Reporting by Clara Ferreira-Marques in London and Aftab Ahmed in Bangalore; Editing by David Cowell)

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