74 Independence Avenue Lusaka, Republic of Zambia

Republic of Zambia

31st March 2000

Konkola Division

Konkola Copper Mines PLC

A dispute has arisen when one party serves a notice on the pother party stating the nature of the dispute. Following the service of notice, the parties should try to settle their amicably.

The parties by agreement in writing between the persons responsible for giving notices may from time to time extend any period referred to in the contract, or substitute for any date referred to in the contract a later date, as they think fit. If Konkola Copper Mines is prevented or hindered from undertaking all or any of its obligations under the contract or exercising any right granted, the period of time and all periods thereafter allowed for the performance of that obligation or exercise of that right shall be extended by a period equal to the period during which such prevention or hindrance continues or during the period from the time when the dispute or difference arose until the time of its determination by the sole expert or settlement by agreement or arbitration. If any period is extended or any later date substituted for an earlier date that extended or substituted period or date shall be deemed to constitute the period or date referred to in the contract. The provisions here shall not be construed to extend the term of the stability period or the environmental plan, the final environmental plan or the environmental liabilities agreement.

The Government of the Republic of Zambia

Konkola Copper Mines PLC

Minister of Mines and Minerals Development and the Minister of Finance

Development Agreement

2000

Konkola Copper Mines and the Government shall within 2 years of the effective date or any longer period agreed between the two parties, negotiate a final environmental plan. The Government agrees to approve the provisions of the final environmental plan provided that such plan incorporates the objectives and requirements of the IFC in respect of the conduct of normal operations at each of the relevant Assets. Konkola Copper Mines must comply with, implement the environmental plan in accordance with the timetable, based on good mining practices and achieve the objectives in the plan before the last day of the stability period. The Government and its agencies shall not enforce any environmental laws, impose any fines or penalties upon Konkola Copper Mines with respect to implementation of the environmental plan during the stability period. If the Government finds Konkola Copper Mines to be in non-compliance of the environmental plan not resulting from it’s own omissions or omissions of its agencies, it should notify Konkola Copper Mines in writing, specifying the details of such noncompliance and the actions it considers necessary to remedy the non-compliance. The Government should also mention the time period, which it considers appropriate to remedy the non-compliance and the reasons why such period is appropriate. If Konkola Copper Mines contests the noncompliance asserted by the Government, it should serve a counter-notice specifying its reasons for disagreeing with the Government within one month of receiving the notice from the Government. Any dispute thereafter should be referred to the sole expert. Konkola Copper Mines will not be considered to breach of the environmental plan or its obligations, if the non-compliance is due to any failure by the Government or its agencies to comply with their obligations under the contract, the enabling legislation, the environmental liabilities agreement, environmental laws, or the environmental plans; an environmental condition not previously known by Konkola Copper Mines, which makes the performance under the contract impossible or more difficult or costly or which delays the performance by Konkola Copper Mines; any material unexpected difficulty which could not be reasonably foreseen, or over come without incurring material additional costs. The Minister on behalf of the Government can amend the environmental plan after discussing the amendments, if the operations under the environmental plan causes material danger to public health and safety or unanticipated environmental damage. Any formal proposal from the Minister to amend the environmental plan should be made in writing to Konkola Copper Mines. It should include a written statement of the reasons for the proposed variation. If the sole expert determines that the Government’s proposal for variation is unnecessary or unreasonable, the proposal will be considered as withdrawn.

Konkola Copper Mines is entitled to an exemption from customs and excise duties, and other duty or impost levied under the Customs and Excise Act, in respect of all machinery and equipment (including specialized motor vehicles) required for any of the activities carried out. Machines and equipment include all item imported for the purposes of effecting or incurring capital. The Government and Konkola Copper Mines agree that good imported by contractors, agents and suppliers of Konkola Copper Mines for the purpose of implementing the approved program of mining and metal treatment are exempt from customs and excise duties. Konkola Copper Mines is liable to pay custom and excise duties on all materials and assets imported for the purposes of the approved program of mining and metal treatment operations, at a rate and on the terms and conditions as set out in the custom and excise act provided that the aggregate duty payable in any one year does not exceed a sum equivalent to 15% of the value of the materials and assets imported, subject to an excise duty of (0%).

The aggregate of the value of customs and excise duty and royalty payable by Konkola Copper Mines if exempt from taxes up to an extent of 16 million USD in the first year following completion and US$ 15 million per annum for the 4 years thereafter.

During the stability period, the Government shall not increase the rates of tax, royalty, impose additional taxes or levies on the purchase of electricity, water or other utility services, or fiscal imposts on the conduct of normal operations, amend the VAT and corporate tax, applicable to Konkola Copper Mines from the existing rate on the effective date.

Konkola Copper Mines should pay the Government of Zambia income tax as per this contract and the Income Tax Act, Chapter 323 of the laws of Zambia. The income tax rate is fixed at 25 %. Losses are permitted to be carried forward for a period of 20 years from the date on which the loss was incurred. Losses should be used on a first in, first out basis with earlier losses used before later losses. Konkola Copper Mines should maintain books of account and render income tax return and returns in respect of royalties and customs and excise duties stated in US $ in accordance with generally accepted accounting principles. In the calculation of Konkola Copper Mines’s liability for income tax, it can deduct any copper price participation payments and any cobalt price participation payments made pursuant to the copper price participation and the cobalt price participation agreements

Konkola Copper Mines should pay the Government a royalty on the gross revenue of minerals produced in the mining areas at a rate of 0.6%, subject to the following; Government confirms that for a period of 20 years from the effective date, the royalty payable under the act shall be deductible in the calculation of Konkola Copper Mines’s income tax liability. Discretion is available to the Government to defer or exempt the payment of royalty if the cash operating margin of Konkola Copper Mines’s mining operations is less than nil; and on samples of minerals acquired for the purposes of assay, analysis or other examination. Cash operating margin means the amount derived by deducting operating costs from revenue without including the capitalized expenditure during or required for the development of the facilities.

Konkola Copper Mines should pay withholding tax on dividends, royalties and management fees to shareholders or affiliates at a rate of 0% and on interest payments to shareholders or their affiliates, or any money lender at a rate of 0%.

Konkola Copper Mines should: (i) comply with the local business development programme in order to encourage and assist the establishment of businesses within Zambia, particularly in the Copper belt and on businesses directly or indirectly majority owned by Zambian citizens, to supply materials, equipment and services to Konkola Copper Mines; (ii) conduct an annual review of progress made on the implementation of the local business development programme and any required variations to it; (iii) identify a member of staff experienced in setting up and managing small business enterprises to assist Zambian citizens who wish to or have set up businesses to offer services to Konkola Copper Mines; and (iv) liaise with appropriate officials from the Government and compile and maintain the register and inform the Government on the implementation and results of the local business development plan.

Konkola Copper Mines agrees to attract qualified Zambian citizens working overseas back to employment within the Zambian mining industry. In order to facilitate this, Konkola Copper Mines will take all reasonable efforts in its recruitment and employment of employees in professional, managerial, engineering and scientific grades to bring to the attention of such qualified Zambians, positions of employment available within Konkola Copper Mines.

Konkola Copper Mines can tender for and procure the supply of materials, equipment and services internationally if such materials, equipment and services are not procurable from businesses within Zambia. It should, on a regular basis, identify and invite businesses in Zambia, which are capable of supplying materials, equipment and services. If a tender meets the requirements, they should not be discriminated against in comparison with international suppliers. Zambian contractors and suppliers should have proven ability and reputation in performing the work required, completing work of similar nature and size within the specified time period; and be established, recognized, reputable and have previously marketed or distributed such materials and/or equipment. In assessing the tenders from local contractors and suppliers, Konkola Copper Mines should consider the extra costs it would incur if it were to grant the contract to a foreign supplier or contractor. Extra costs include wharfage costs, shipping costs, stevedoring costs, custom clearance costs, customs duties, and demurrage charges. Notwithstanding this section, Konkola Copper Mines is free to make arrangements with suppliers or contractors as it wishes.

Konkola Copper Mines should provide the following local municipal services in the areas in which it operates: water, sewerage services, solid waste, domestic electricity supply, street lighting, storm water drainage, roads, markets, and cemeteries. Konkola Copper Mines should also co-operate with the local councils and the local electricity supply provider in ensuring transitional arrangements and put in place for recovering costs of such services from Konkola Copper Mine's employees are effective.

Konkola Copper Mines agrees to submit to the International Centre for Settlement of Investment Disputes any dispute for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Convention). Konkola Copper Mines, because of foreign control, will be treated as a national of a state other than the Republic of Zambia for the purposes of the Convention. The parties agree that the transaction to which this contract relates to is an investment. Any arbitral tribunal constituted should have 3 arbitrators. Each party can appoint 1 arbitrator within 14 days of the request for arbitration. The 3rd arbitrator will be the president of the tribunal and be appointed by agreement of the other two arbitrators, within 28 days of making the request for arbitration. None of the arbitrators can be a citizen or a national of, or a permanent resident in, Zambia or South Africa. Any arbitration proceeding pursuant to the contract shall be conducted in accordance with the arbitration rules of ICSID. In the event of a conflict, the provisions of the arbitration clause shall take precedence over such arbitration rules. Arbitration proceedings commenced pursuant to this contract should be held in London, which shall be the seat of the arbitration proceedings. The language of the arbitration proceedings will be English. Any award in arbitration proceedings held shall be binding on the parties and judgment may be entered in my court having jurisdiction for the purpose. The parties waive any right to appeal to any court of law or other judicial authority in connection with any arbitration proceedings conducted pursuant to this contract. The costs incurred by the parties in connection with any arbitration shall beborne equally by the parties if the dispute was referred jointly. The parties can apply for interim relief on any urgent or any other basis to a court of competent jurisdiction.

Konkola Copper Mines can assign its interest in a large-scale mining license and this agreement to a person of shared interest, with the consent of the Minister, which consent shall not be withheld. If the entire interest is assigned, Konkola Copper Mines is discharged from any liability after the date of assignment. Konkola Copper Mines can charge fixed or floating charge on the large-scale mining licences to secure repayment of principal, and payment of interest and other fees, costs and expenses relating to loans made to Konkola Copper Mines to finance or refinance scheduled programs and any hedging arrangements. The Government agrees to procure the consent of the minister provided that such mortgages and charges are notified to the minister when granted. There is no restriction on Konkola Copper Mines to sell, mortgage, charge or assign or encumber the whole or part of its undertaking, including leases, facilities, mine products, surface rights and other rights essential to the maintenance and operation of facilities, together with any assets and relevant agreements to which Konkola Copper Mines is a party. If Konkola Copper Mines considers that the minister has acted unreasonably while considering a proposed assignee or the acquiring party has not demonstrated sufficient financial capacity or technical, it can refer the issue to a Sole Expert for its opinion If the Sole Expert has the same view as the minister, the minister's determination stands; or if the assignee or acquiring party has demonstrated requisite levels of financial capacity or technical ability, the minister's determination should be set aside and consent should be given and the change of control or assignment should be permitted without further action on the part of the Government or the minister

Konkola Copper Mines may terminate the contract at any time after the 20th anniversary of the effective date by giving 12 calendar months notice to the Government. The Government may terminate the contract by notice to Konkola Copper Mines if the all the large scale mining licences have expired and have not been renewed or deemed to have been renewed or have been abandoned. The contract can be terminated if either the Government or Konkola Copper Mines are in material default in the performance of any of its obligations the contract or fails to comply with any binding determination made by a sole expert or award made by a tribunal pursuant to an arbitration or if Konkola Copper Mines is in default and has failed to remedy the default within 30 days of being notified. In the event that Konkola Copper Mines is the defaulting party, the Government shall ensure that the minister does not make a decision to suspend or cancel any of the large scale mining licences and that no action is taken by or on behalf of the Government without the approval of Konkola Copper Mines to terminate such licences or any of the leases prior to the termination date.

The Government undertakes that it shall use all confidential information only for the purpose for which it was given to Government of Zambia and not for any other purpose. It should treat and safeguard all private and confidential information and ensure proper and secure storage.

This contract shall be governed and understood in accordance with the laws of Zambia which are in force on the date of execution of this contract.

Any failure on the part of a party to comply with any of the terms, conditions and provisions of the contract, except any obligation to make payment of money to the other party, will not be grounds for termination or give the other party any claim for damages if the failure arises from force majeure and the party has taken all appropriate precautions, due care and reasonable alternative measures with the objective of avoiding such failure and of carrying out is obligations under the contract; and has given notice to the other party of the occurrence of force majeure becoming aware of such an event, provided that no party has an obligation to settle a labor dispute or to test the constitutionality of any legislation or law. Force majeure means act of war (whether declared or undeclared), invasion, armed conflict, act of foreign enemy, act of terrorism, martial law, military or usurped power, insurrection, revolution, civil disturbances, blockades, riots, embargoes, strikes, lock-outs and other labor conflicts, sabotage, criminal damage, land disputes, epidemics, plague, volcanic eruptions, earthquakes, subsidence, heave, landslip, collapse, rock falls, storms, cyclones, floods (including flooding of underground mine works),explosions(including nuclear and the explosion explosions), fires, lightning, methane and other underground gases ‘thereof, radioactive or chemical contamination or ionising radiation unless the source or cause of the contamination, radiation or other hazardous thing that has been brought onto or near operations by the party claiming force majeure or those employed or engaged by the party claiming force majeure unless it is or was essential for the construction or operation of the facilities, non-availability of electrical power, gas, water or other utilities other than due to the negligence or default of Konkola Copper Mines, restrictions imposed by the Government or other authorities of any country which has jurisdiction either over Konkola Copper Mines or its operations or destruction of, damage to or unavailability of materials, equipment or supplies and any other event which the party claiming force majeure could not reasonably be expected to prevent or control. Konkola Copper Mines can at any time notify the Government that an economic force majeure event or a material adverse change event has occurred and is continuing. Konkola Copper Mines should take all appropriate precautions, due care and reasonable alternative measures with the objective of avoiding the service of a notice of a economic force majeure event or a material adverse change event and should take all reasonable measures to overcome such events, so far as it is within its reasonable control and to fulfill the terms and conditions of the contract with the minimum of delay.

Konkola Copper Mines should submit annual reports of its operations to the Government. The first report should be submitted 3 months after the first financial year end and contain the progress and results of mining and smelting operations and prospecting and appraisal activities. Konkola Copper Mines should also provide quarterly reports to the Ministry. The first report is to be submitted on 30th June 2000 and thereafter on 30 September, 31 December, 31 March and 30 June annually on a mine by mine basis including the following details; quantities of ore mined and average head grades; quantities of waste mined; quantities of copper and cobalt concentrates produced and quantities contained copper and cobalt; quantities of own mine products produced and quantities sold; quantities of sulphur contained in pyrite mined and quantities of pyrite concentrates produced; operating costs; and prices obtained on sales of own products; progress in implementing the scheduled programs, the extent of any continuing non-compliance by Konkola Copper Mines with environmental laws and progress made in remedying this in accordance with the environmental plan. Konkola Copper Mines should file with the Ministry annual reports summarizing geological and metallurgical investigations and other material data obtained from prospecting activities. All information should be in English and United States dollars. Konkola Copper Mines should maintain all original records and reports relating to its activities and operations under the contract at its principal office in Zambia and should be open to inspection by authorized representatives of the Government.

The Government undertakes that, during the stability period, it shall not make any changes to the legislation or regulations governing the regulation and management of companies to impose a requirement that the directors of Konkola Copper Mines comprise a higher number of Zambian residents than required by section 280 of the Companies Act, being more than 30%. It shall not make any changes to legislation or regulations governing the operation of mines or related activities or to the import and export regulations and procedures within Zambia, or in the case of legislation or regulations governing the terms and conditions of employment within Zambia, which would prevent Konkola Copper Mines from operating on a seven days a week, 24 hours a day, 365 days a year basis; or negotiating with employees or relevant unions or engaging employees or terminating their contracts of employment in such a manner, which would have a material adverse economic effect, individually or cumulatively, on the implementation of the approved programe of mining and metal treatment operations and/or the conduct of normal operations. The Government should not make any changes to legislation relating to regulation and management, insolvency, bankruptcy, receivership, administration or winding-up of companies, which would prejudice the validity or enforceability of the pledge, the charges or the rights of Konkola Copper Mines under the shareholders' agreement. The Government of Zambia also agrees to not vary, amend or cancel this agreement during the stability period. It should also ensure that no law, statute, regulation or enactment be passed or made, which would discriminate against Konkola Copper Mines in the conduct of normal operations. The Government covenants that it shall not acquire the facilities or any other assets Konkola Copper Mines, except for public purposes under an act of parliament relating to the compulsory acquisition of property which provides for payment of compensation at fair value as between an independent buyer and seller in respect thereof. The Government is not restricted from introducing legislation relating to transfer pricing to ensure that all transactions between companies and their Affiliates are conducted on arms' length terms. During the stability period, the Government agrees to not alter the right of non-Zambian citizens on their arrival or permanent departure from Zambia to import household and personal effects, free of duty and tax, for personal use, within 6 months from the date of arrival; export personal items imported and acquired during residency in Zambia without any imposition of duty or tax; and freely remit all income earned within Zambia during residency. It shall also not increase import duty rates applicable to Konkola Copper Mines on the import of goods and materials required for the approved programe of mining and metal treatment operations or normal operations, above 15%; or impose royalties or duties that have a material adverse effect on distributable profits or cash flows or the dividends or other amounts received by its shareholders.