In 2018 the government of the Democratic Republic of the Congo held Glencore, a global commodities and mining giant, over a barrel.
However, by June 2018 an agreement was reached with Gécamines to regularise the capital deficiency by converting $5.6-billion of existing inter-company debt, owed by KCC to Katanga, into equity. To ensure Gécamines’ 25% interest was not diluted, which was contractually required, $1.4-billion of the total debt converted to equity was effectively “gifted” by Katanga to Gécamines.
Shareholders, it would appear, accept this as an inevitable consequence of investing in countries such as the DRC, where governance is not a principle to be upheld. A cursory glance at the results of voting at the AGM, would suggest that the company’s shareholders and directors are in near-complete harmony. Every resolution was supported by more than 93% of shareholders, with the average closer to 96%.
In December 2018, Glencore-controlled mining company Katanga Mining, which is listed on the Toronto Stock Exchange, agreed to pay C$28.
Aside from the punitive damages, which arguably do not amount to much, the share price has fallen 18% since July 2018 and was trading at R51.26 on Monday afternoon. In comparison mining peers BHP and Anglo American have seen their share prices rebound in the same period, BHP by 57% and Anglo by 94%.
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