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GÉCAMINES enters into settlement agreement

Published by , Editor
Global Mining Review,

On 12 June 2018, GÉCAMINES, together with its subsidiary SOCIÉTÉ IMMOBILIÈRE DU CONGO (SIMCO), entered into a settlement agreement with KATANGA MINING LIMITED and some of its affiliated companies (the KATANGA GROUP), as well as its joint company KAMOTO COPPER COMPANY (KCC).

Under the terms of the agreement, the following goals and results are targeted, among others:

  • KCC’s net equity will be restored in accordance with applicable laws.
  • KCC’s indebtedness towards the GLENCORE group will be reduced from US$9 billion down to US$3.45 billion as at 1 January 2018.
  • Interest rates applicable on intra-group loans are revised and shall no longer exceed 6% per year.
  • On the basis of KCC’s current business plan, as early as the 2019 fiscal year, GÉCAMINES will start, for the first time, receiving dividends, which assessed cumulated amount should exceed US$2 billion over the next 10 years.
  • The profits will allow for the payment of corporate taxes being likely to significantly contribute to the replenishment the Congolese State’s treasury.
  • A better valuation, in the future, of GÉCAMINES’ contribution of the copper and cobalt deposits to the partnership through a significant increase of the amount per tonne of the pas de porte, from US$35 - 110, and which can reach US$170 in certain scenarios.
  • A significant increase of the valuation of GÉCAMINES’ ownership in KCC, which value was until then nil due to the high level of indebtedness of the company.
  • The waiver by KCC to the benefit of the JORC certified reserves amounting to 3 992 185 tCu and 205 629 tCo (the reserves), releasing GÉCAMINES from its obligation to deliver the reserves or, failing that, to pay a counter-value of a maximum amount of US$285 million.
  • The payment by the KATANGA GROUP of a settlement indemnity (US$150 million) in favour GÉCAMINES.
  • The withdrawal by GÉCAMINES and SIMCO, at closing, from the judicial proceeding initiated before the Commercial Court of Kolwezi on 20 April 2018.

GÉCAMINES welcomes the outcome of the discussions with the KATANGA GROUP and its majority shareholder GLENCORE PLC, and the new foundations now set for the partnership, with a view to an effective sharing of wealth, with immediate financial benefits for all the stakeholders, and in particular the Democratic Republic of the Congo and the affected communities. GÉCAMINES hopes that upcoming negotiations with other partners and companies will be conducted in a similar open and respectful climate, and will reach the same satisfactory outcome.

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