Management of Congo's $2-billion Tenke Fungurume copper/cobalt project in Katanga is embroiled in a spat with provincial authorities over payment of royalties and taxes, officials said Thursday.

Government officials, last week, provincial law makers voted to compel management to start paying part of the taxes and royalties to provincial authorities, a move that has since been rejected by management. Tenke Fungurume is owned by U.S.-based Freeport McMoRan Copper & Gold Inc. (FCX) and started output in March.

Margaret Rashidi Kabamba, the spokeswoman for Tenke Fungurume said in a statement Thursday that management would continue to pay taxes only to the central government in Kinshasa which is supposed to remit 40% of the revues to the province.

"We are quite convinced that the central government and the provincial government will find a compromise. But we are cooperating with both. The laws say that we must pay 100% to the central government. We encourage the provincial government to [enter into] dialogue with the central government to reach a compromise." she said.

Kabamba said that between October 2006 and April 2009, the company paid up to $106 million in taxes to the central government.

Early this week, provincial authorities sought to retain 0.8% of the royalties paid by the project but this was rejected by management. Katanga Governor Moisi Katumbi traveled to Kinshasa Wednesday and is expected to hold talks with Congolese Prime Minister Adolphe Muzito on the issue.

Congo's central government has in past clashed with the Copper-rich Katanga province over minerals revenues. Copper output from Katanga is expected to hit 400,000 metric tons by 2012.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; +256 75 262 4615; bariyonic@yahoo.co.uk