JOHANNESBURG (miningweekly.com) – State-owned La Générale des Carrières (Gécamines) says it was forced to take legal action to dissolve TSX-listed Katanga Mining’s Kamoto Copper Company (KCC) for failure to restore shareholders’ equity within the legal time period.
The State-owned miner has initiated court proceedings to seek the dissolution of KCC in the Democratic Republic of Congo (DRC), after Katanga failed to reduce billions of dollars of intercompany debt that has limited Gécamines’ share of profits.
Gécamines holds a 25% interest in KCC.
Katanga, in which diversified miner Glencore holds a 65% interest, on Monday informed its shareholders that Gécamines had initiated the legal proceedings, but argued that KCC had made “numerous attempts” to engage in negotiations with Gécamines regarding a recapitalisation plant.
In response, Gécamines on Tuesday said the situation justifying a judicial dissolution has now persisted for more than ten years without any regularization, despite several warnings.
“The majority shareholders group implemented a policy that resulted in draining, to its own benefit, the treasury and the wealth of the joint company,” Gécamines said.
“Although for ten years, in accordance with the law, the company could have been dissolved and the mining rights recovered by Gécamines without any financial compensation, a form of management was perpetuated which severely harmed the interests of Gécamines and, more generally, the DRC, and which it is now critical to end.”
Katanga on Monday said it would continue to attempt to engage in discussions with Gécamines and would take all other necessary steps to ensure the continuation of the KCC operations and to protect its rights under the law and its joint venture agreement with Gécamines.
A court hearing is scheduled to be held in the DRC on May 8, on which the court may grant KCC six months to regularise the situation.