Reaction to the press release published by Katanga Mining on April 22, 2018 concerning the proceedings to dissolve Kamoto Copper Company SA (KCC) initiated by Gécamines
Democratic Republic of Congo, 24 April 2018 – On April 20, 2018, Gécamines (http://Gecamines.cd) summoned Kamoto Copper Company SA (KCC) and its majority shareholders group controlled by Glencore before the Commercial Court of Kolwezi, in order to request from the latter the dissolution of KCC for failure to restore shareholder’s equity within the legal time period. KCC is a joint company held at 25% by the Gécamines Group and at 75% by the Glencore Group.
On April 22, 2018, Katanga Mining, subsidiary of Glencore, took the initiative of making public and commenting on the procedure thus initiated by Gécamines.
Gécamines wishes, for its part, to add the following clarifications:
1. Gécamines was forced to initiate this procedure, as the situation justifying a judicial dissolution has now persisted for more than 10 years, without any regularization despite several warnings.
2. On the contrary, it appears that, during this period, through a series of intragroup financial and commercial agreements, the majority shareholders group implemented a policy that resulted in draining, to its own benefit, the treasury and the wealth of the joint company.
3. Indeed, based only on the last four years, the financial debt has thus increased from USD 3,233,736,880 to USD 4,572,497,908 and the commercial debt from USD 1,967,255,847 to USD 4,473,525,056, so that the company found itself indebted to the Glencore Group for the amount of 9 billion USD at the end of 2017, with annual interest rates reaching 14%, far from the conditions under which the parent company borrows, to then lend to the joint company. It is thus hundreds of millions of dollars of interests which are due each year by KCC to the majority shareholders group.
4. The policy on service and sub-contracting agreements, organized in favor of the companies affiliated with the Glencore Group, constituted another type of practice at the expense of Gécamines and SIMCO, which contributed to affecting the performance of this joint company, which never distributed any dividends.
5. Thus, although for 10 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 of the DRC, and which it is now critical to end.