23 Apr DRC moves to dissolve Glencore-owned copper subsidiary
Glencore has confirmed that the Democratic Republic of Congo’s state-owned mining company has begun legal proceedings to dissolve one of its subsidiaries because of a capital shortfall.
In a company statement, the Anglo-Swiss commodities giant said it has ‘several options’ to address this shortfall at Kamoto Copper Company (KCC).
These options include conversion of a portion of existing debt owed by KCC to Katanga Mining Company, the TSX-listed company that controls KCC, or forgiving that debt.
“Any such outcome would impact the distribution of future cash flows earned by KCC,” said the statement.
Katanga is a joint venture between Glencore and the DRC’s state-owned entity Gecamines. Last year, it flagged a US$3.9 billion capital deficiency which led Glencore to issue a warning that legal action might be taken by the DRC. Now, a court hearing has been scheduled for May 8.
High levels of debt built into mining companies operating in the DRC has developed into a major bone of contention in the African nation which is the world’s largest source of cobalt and the biggest copper producer on the continent.
In response to this growing debt, Gecamines plans to renegotiate partnerships with international companies to give the company a greater stake in mining revenue and profit.