Kinshasa — A Democratic Republic of Congo (DRC) 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 south-eastern DRC, ordered the suspension while it awaits a ruling by the supreme court on its competence to hear the case, Françoise Kena wa Tshimanga, a lawyer for Kamoto Copper (KCC), said by phone on Tuesday. Katanga Mining, 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 on 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 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 south-east Congo, is a joint venture between Katanga, which owns 75% of the company, and Gecamines. Glencore, based in Baar, Switzerland, owns more than 86% of Katanga.
KCC’s total debt stood at $9.2bn at the end of December, leading to a $4.2 bn shortfall in working capital that Katanga was required by DRC 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 tonnes of copper and 34,000 tonnes of cobalt in 2019, which would make it DRC’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.