The Republic of Congo terminated a contract with Sundance Resources, an Australian miner, to develop the large Mbalam-Nabeba iron ore deposit and awarded three new licences to a relatively unknown Chinese-backed company, according to Bloomberg.
On November 30, President Denis Sassou Nguesso signed a decree with four ministers in which the government invoked several reasons, including underdevelopment and unpaid fees, to cancel iron ore mining contracts across the Republic of Congo and Cameroon.
It is estimated that the mines belonging to the Congolese side contain at least 500 million tons of ore.
On December 17, Congo's president, Sassou Nguesso, issued a decree in the official gazette confirming that the licence had been revoked because of "chronic underexploitation which is clearly contrary to the potential of the deposit" and the failure to pay royalties.
A separate presidential decree granted the permit to Sangha Mining Development Sasu, based in pointe Noire, Congo.
Sangha Mining Development Company is licensed in the Avima, Nabeba and Bandodo regions.
Sundance began operating in northern Congo in 2010 and has invested nearly $300m.
After hearing the decision "through informal channels" earlier this month, Sundance notified the government that it would contest the decision, Chief Executive Giulio Casello said by telephone.
Casello says the company has been trying to raise money for the project because the environmental impact certificate has not yet been signed.
Under the current agreement, disagreements with the government would be amicably resolved within 60 days, after which the company could take the matter to an arbitration court in London, Casello said.
He declined to say what steps the company planned to take.
Sundance Resources said on Monday it had started arbitration proceedings to seek $8.76bn in damages from the Republic of Congo after the Congolese government withdrew its licence for the Nabeba iron ore project.
African Mining circles note that the DRC's gross domestic product (GDP) in 2019 was $10.821 billion, with claims amounting to more than 80% of total GDP.
The Nabeba licence is part of Sundance's flagship Mbalam-Nabeba project, which crosses the border between Congo and Cameroon.
The company has yet to start mining iron ore.
A Sundance spokesman did not immediately respond to the government's allegations, but the company said in a statement that it formally began arbitration proceedings on December 15.
Sundance said the suspension was "shocking in its scale, audacity and defiance of Congolese mining laws".
Under arbitration, the two sides have 54 days to negotiate a settlement for the first time, but Sundance said it would only reach a settlement if the government agreed to pay substantial damages.
Sundance has also been embroiled in controversy over its licence in Cameroon, which it says the government company did not issue the permits it needed to extract from the site.
In 2013, China's Sichuan Hanlong Group tried to buy Sundance for $1.2 billion to gain control of the iron-ore project.
The Republic of Congo is rich in oil and natural gas resources.
By 2014, the Republic of Congo had proved recoverable oil reserves of about 1.9 billion barrels and natural gas reserves of about 100 billion cubic meters.
Large-scale offshore drilling began in the early 1870s, and the inland oil fields were still in the exploration stage.
It is sub-Saharan Africa's third largest oil producer.
The reserves of potash ore are about 1 billion tons, phosphate ore 6 million tons and iron ore about 1 billion tons.
In addition, there are aluminum, zinc, copper and other metal ore.
