By Michael Gunn and Firat Kayakiran<\/p>\n
Nevsun Resources Ltd. (NSU), a takeover target which mines gold and copper in Eritrea, is being sued for alleged complicity in human-rights abuses at its operations in the African nation. The company denied the allegations.<\/p>\n
The suit filed yesterday by three plaintiffs in the Supreme Court of British Columbia claims the Vancouver-based company\u2019s Bisha mine was built using \u201cforced\u201d laborers who faced the threat of torture by the Eritrean government, according to the filing.<\/p>\n
\u201cWe are confident that the allegations are unfounded,\u201d Nevsun Chief Executive Officer Cliff Davis said in a statement. \u201cBased on various company-led and third-party audits, the Bisha mine has adhered at all times to international standards of governance, workplace conditions and health and safety.\u201d<\/p>\n
Human rights conditions in Eritrea are \u201cdismal\u201d with indefinite military service, torture, arbitrary detention and restrictions on freedom of expression driving a refugee exodus, according to Human Rights Watch. Military conscripts provide forced labor in civilian roles, the New York-based group said in its World Report 2014.<\/p>\n
Nevsun has a 60 percent shareholding in Bisha Mining Share Co., while the Eritrean government holds the remaining stake through the state-owned Eritrean National Mining Corp. The mine produced only gold until last year, when it began to expand into copper and zinc. It plans to produce 80,000 metric tons to 90,000 tons of copper this year and aims to start zinc production at the beginning of 2016. The site is located 90 miles (145 kilometers) west of Eritrea\u2019s capital, Asmara.<\/p>\n
No one answered the phone at Bisha Mining Share when Bloomberg called today outside regular office hours.<\/p>\n
Segen Subcontractor<\/p>\n
QKR Corp., a mining fund headed by former JPMorgan Chase & Co. (JPM) banker Lloyd Pengilly, is close to making a bid of about $1 billion for Nevsun, according to people with knowledge of the situation. QKR is funded by Qatar\u2019s sovereign wealth fund and Jan Kulczyk, Poland\u2019s richest man.<\/p>\n
Nevsun confirmed yesterday that it has received from various parties expressions of interest on a potential corporate transaction and that any discussions are at a preliminary stage.<\/p>\n
The lawsuit alleges that by entering a commercial relationship with the Eritrean government, Nevsun \u201caided, abetted, contributed to and became an accomplice to the use of forced labor, crimes against humanity and other human rights abuses at the Bisha mine.\u201d<\/p>\n
The trio of plaintiffs in the case against Nevsun, all Eritrean nationals who say they fled the country after being forced to work at the mine, are seeking damages, according to the court filing. To build the mine, Nevsun \u201cengaged\u201d companies called Segen, Mereb and the Eritrean military, which sourced the \u201cforced labor,\u201d the filing says.<\/p>\n
Joe Fiorante of Vancouver-based Camp Fiorante Matthews Mogerman and Dimitri Lascaris, a partner at Siskinds in London, Ontario, are co-counsels for the plaintiffs, according to a statement.<\/p>\n
The case is Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle v. Nevsun Resources Ltd., S-148932, Supreme Court of British Columbia, Vancouver.<\/p>\n
To contact the reporters on this story: Michael Gunn in Nairobi at mgunn14@bloomberg.net; Firat Kayakiran in London at fkayakiran@bloomberg.net<\/p>\n
To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net Michael Gunn, Simon Casey<\/p>\n
<\/p>\n
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