Tag Archives: FQVLF

First Quantum loses its Congo mine

This is the nightmare scenario that scares a lot of traders out of the frontier markets: The Democratic Republic of Congo is liquidating FQ’s copper project.

Although First Quantum (FQVLF, quote) says it will fight the local court’s decision to shut down its $750 million project, it is unclear just where the Canadian company can go for help.

The DRC claims that FQVLF failed to live up to its contractual obligations. The parties are already disputing the case before the International Chamber of Commerce.

Another company, Highland Properties of the Virgin Islands, has reportedly already signed up to replace FQVLF on the project.

This is a textbook example of why frontier markets like the DRC (or Mongolia or Venezuela or Bolivia or, until recently, Russia itself) are so risky. The government holds all the cards and foreign corporations are really just hostage to its good behavior.

Sometimes that relationship works out really well. Other times — as FQVLF and its shareholders are discovering — it does not.

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