Glencore (OTCPK:GLCNF, OTCPK:GLNCY) says its Katanga Mining (OTCPK:KATFF) subsidiary is assessing options for a recapitalization as it seeks to head off a dispute with the Democratic Republic of Congo’s state-owned Gecamines mining company.
Gecamines says it has launched legal proceedings to dissolve Katanga Mining, operator of an asset that is forecast to become the world’s largest cobalt mine, because of a $3.9B capital shortfall.
Glencore, which owns 86% Katanga, says it is considering a number of options, including “forgiving” a portion of the debt held by its subsidiary.
“The tangible impact to Glencore from this development is nearly nil,” says RBC analyst Tyler Broda, but “the decision by Gecamines to proceed to court in light of the current challenges relating to the new mining code is likely to be taken negatively.”
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