Congo Court Suspends Gecamines Bid to Dissolve Glencore Unit
(Bloomberg) -- A Democratic Republic of Congo court suspended proceedings initiated by state-owned mining company Gecamines to dissolve a unit of Glencore Plc until at least next month.
The Commercial Court in Kolwezi, in southeastern Congo, ordered the suspension while it awaits a ruling by the Supreme Court on its competence to hear the case, Francoise Kena wa Tshimanga, a lawyer for Kamoto Copper Co., said by phone Tuesday. Katanga Mining Ltd., which controls KCC, obtained a decision from the Supreme Court on May 4 allowing it to challenge the Kolwezi court’s competence, Katanga said in a statement Tuesday. The Supreme Court’s first hearing is scheduled for June 15, according to the statement.
Gecamines President Albert Yuma didn’t answer his phone when Bloomberg called him and Glencore declined to comment.
Gecamines sought the dissolution of KCC last month over what it says was Glencore’s failure to address a capital shortfall at the company for more than a decade. KCC, which operates a copper and cobalt mine in southeast Congo, is a joint venture between Katanga, which owns 75 percent of the company, and Gecamines. Glencore, based in Baar, Switzerland, owns more than 86 percent of Katanga.
KCC’s total debt stood at $9.2 billion at the end of December, leading to a $4.2 billion shortfall in working capital that Katanga was required by Congolese law to resolve before January.
KCC only resumed production in December after a two-year hiatus during which it invested in new processing facilities. While Gecamines owns a quarter of the project, it doesn’t contribute to investment costs, which are wholly funded by Katanga.
Glencore expects KCC to produce as much as 300,000 metric tons of copper and 34,000 tons of cobalt in 2019, which would make it Congo’s biggest copper mine and the world’s largest producer of cobalt. The price of cobalt, a key ingredient in rechargeable batteries needed to power electric vehicles, has almost quadrupled in the past two years.
Katanga says there are several courses of action available to address the capital shortfall, including the conversion into equity of a portion of existing debt owed by KCC to Katanga or forgiving some debt.
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