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Australian Swiss mining giant Glencore PLC announced a massive $5.6 billion restructuring of its troubled Congo copper company, Katanga Mining last week which resolved the fiery dispute with Congo’s state-run mining companies massive debt load.

Glencore Katanga Copper

Glencore said Katanga Mining will issue $5.6 billion in stock to retire debt.  $KAT has been debt ladden for ten years by $9.2 billion in high-interest debt. The majority was owed to Glencore. Katanga Mining is one of Glencore’s flagship Congolese copper mines.

Some have called the operation a calamity as it has suffered from a seemingly endless series of spills and power outages. It hasnt helped of course having such a massive debt burden. Back in 2015 Glencore suspended operations at Katanga in 2015 to revamp its infrastructure and boost production. Congo’s state-run mining company, Gecamines, said the massive Katanga debt created a shortfall in capital that violated Congolese law.

In April Gecamines took court action agaisnt Katanga Mining in Congo seeking to dissolve its Kamoto Copper Co. subsidiary, known as KCC, for its failure to resolve the capital deficiency.

Katanga Mining owns 75% of KCC, which operates a giant copper and cobalt mine in Congo’s soutth eastern copper belt, the other 25% is owned by Gecamines. With Glencore owning 86% of Katanga Mining $GLEN moved to resolve the crisis.

Glencore said Gecamines will receive a one off payment of $150 million to resolve a number of “historical commercial disputes.” Glencore said they will also waive a $285 million payment Gecamines had agreed to make several years ago. Gecamines, in return for the concessions, has agreed to withdraw its lawsuit. 

In November three Katanga directors stepped down from the board following an internal review that found “material weaknesses” in the company’s controls over financial reporting, according to a Glencore announcement at the time. The move came while an investigation by Canada’s Ontario Securities Commission, or OSC, into governance practices at Katanga Mining was in process.

Note back in July The Wall Street Journal reported that Glencore’s Katanga Mining is subject to an investigation by Canada’s OSC regarding payments it made to a company owned by an Israeli businessman. 

Source: WSJ

From a Sunburnt Country ....

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