Mining Tycoon Eager To Deal With Rebels Negotiating Contract To Work Huge Copper Mine In Zaire

Like mining developers around the world, Swedish tycoon Adolf Lundin is eager to do business with the rebels who have seized three-fourths of resource-rich Zaire.

Lundin had signed a deal last year with the government mining company of President Mobutu Sese Seko. But now that rebel alliance led by Laurent Kabila controls the mine site, Lundin is set to pay the alliance the first $50 million of a $250 million contract for what he calls “the biggest copper mine in the world.”

On the Swede’s first visit to the Shaba copper belt since rebels captured it at the beginning of last month, the 64-year-old Lundin went for his morning run on part of the 560-square-mile concession.

“Isn’t it good to jog on your own property?” asked Lundin, the majority shareholder in the Vancouver, Canada-based Tenke Mining Corp.

Tenke is among international mining companies - the total number is unknown - lining up to make deals with Kabila’s Alliance of Democratic Forces for the Liberation of Congo-Zaire, which now controls most of Africa’s third-largest nation.

Even before the rebellion began in September, production of Zaire’s vast mineral resources had plunged, troubled by instability, looting, corruption and problems with such basic needs as electricity supply.

In 1994, Zaire’s copper production fell to 33,600 tons from 147,300 tons in 1992, while the output of cobalt declined to 3,600 tons from 6,400 tons during the same period, according to the 1997 Africa South of the Sahara reference book.

Zaire is believed to hold half to two-thirds of the world’s cobalt reserves, a metal for which demand is expected to soar, as well as vast copper and diamond reserves.

Among companies eager to revive Zaire’s mines is Arkansas-based America Mineral Fields, which signed a $1 billion agreement with the alliance in mid-April for copper and cobalt projects.

Also talking to the rebels are South African mining giants Anglo-American Corp. and DeBeers Consolidated Mines, Ltd., both wanting diamond concessions in alliance-held territory.

Tenke officials say annual production from their project alone could hit 100,000 tons of copper and 8,000 tons of cobalt, exceeding the entire country’s production three years ago.

Lundin has yet to sign a new deal or hand over money to Kabila’s alliance, which has yet to topple Mobutu. But he’s confident.

“I think we already have the blessing of the new government,” Lundin said.

He said he was encouraged that rebel mining minister Kambale Mututulo joined him at the site on April 27. The day after the visit, Tenke shares rose 20 cents to $3.50 on the Toronto Stock Exchange.

Investment in the Fungurume mining site, 12 miles west to the village of Tenke, is expected to hit $1.5 billion within 10 years.

Lundin first saw the site in 1994, more than 20 years after surveys hinted at its potential. He raised the initial $86.5 million for a joint venture with the Zairian government mining company, Gecamines.

The rebellion that started shortly after the deal was signed unnerved some of Lundin’s backers. He assured investors that their assets were safe.

“If I had any hesitation, I never told anyone,” Lundin said. “You know, you always have to have a stiff upper lip.”

Mututulo called the Tenke-Fungurume project one of Zaire’s most important, and the biggest in rebel-held territory.

“This is something that I think will encourage others to come, knowing that big investors like these are not afraid to come here,” the rebel mining minister said.

“It’s a tremendous feeling of adventure - and not only adventure,” he said, adding, “The copper is here. The only limit is our own ability to do it.”