A Glencore subsidiary said the Democratic Republic of Congos state-owned mining company began legal proceedings to dissolve a unit forecast to become the worlds largest cobalt mine, because of a capital shortfall.
Toronto-listed Katanga Mining said it has several options to remedy the deficit at Kamoto Copper, which operates a copper and cobalt mine in southeastern Congo, according to a statement issued on Sunday. Possible courses of action include the conversion into equity of a portion of existing debt owed by KCC to Katanga or forgiving some debt, it said.
n++Any such outcome would impact the distribution of future cash flows earned by KCC,n++ Katanga said. KCC is a joint venture between Katanga, which owns 75% of the company, and Gecamines, Congos state miner. Glencore, based in Baar, Switzerland, owns more than 86% of Katanga.
High levels of debt at mining companies are becoming an increasingly heated issue in Congo, the worlds largest source of cobalt and Africas biggest copper producer. Gecamines has said it plans to renegotiate partnerships with international companies to give it a greater stake in mining revenue and profit.