Date:Apr 25, 2018
Congo’s state-owned mining company has accused Toronto-listed Katanga Mining Ltd. of draining hundreds of millions of dollars from their joint-venture copper and cobalt mining company.
Katanga, owned by Swiss-based mining giant Glencore PLC, had seen its share price soar over the past year on projections that it will become the world’s biggest producer of cobalt, an essential element in batteries for electric cars.
The boom in electric cars, which has led to a tripling of cobalt prices over the past two years, has boosted Glencore into a powerful position as a dominant supplier to the auto industry, despite investor jitters about instability and corruption in the Democratic Republic of the Congo.
But the fragility of Katanga’s position became clear this week. The revelation of the dispute between Glencore and state-owned Gécamines, including the state company’s threat to dissolve their joint venture, triggered a 50-per-cent drop in Katanga’s shares on the Toronto Stock Exchange on Monday.
Its share price recovered slightly on Tuesday, but its conflict with Gécamines continued to escalate as the Congolese company intensified its attack.
In a statement on Tuesday, the state mining company said Glencore and Katanga had created a massive debt of about US$9-billion at the joint venture, forcing the local company to pay interest rates of up to 14 per cent to Glencore, which controls 75 per cent of the joint venture, one of the biggest copper and cobalt projects in Africa’s biggest copper-producing country.
Congo, a vast and impoverished country of about 80 million people with huge mineral resources, has become increasingly critical of foreign mining companies in recent years, accusing them of failing to pay their fair share of revenue to the state. Congo’s government has introduced a new mining code that raises taxes and royalties.
