SA mining firm defends $1.4bn DRC ‘gift’

How thin is the line between a gift and bribe? Glencore CEO Ivan Glasenberg describes a $1.4bn debt write-off as a ‘gift’ to the DRC Government, saying it’s the cost of doing business in a ‘poor’ country where the government is desperate for cash. The DRC’s state-owned mining company, La Générale des Carrières et des Mines (Gécamines) last year launched legal proceedings to dissolve the Kamoto Copper Company (KCC), in which Katanga Mining held 75%, with Gécamines holding the remaining 25%. Katanga is majority owned and controlled by Glencore. The Daily Maverick reports that the reason for the proposed dissolution of the company was the considerable amount of debt that KCC held on its balance sheet, which was required to be recapitalised under DRC law. However, the report notes that an agreement was reached with Gécamines to regularise the capital deficiency by converting $5.6bn of existing inter-company debt, owed by KCC to Katanga, into equity. To ensure Gécamines’ 25% interest was not diluted, which was contractually required, $1.4bn (25%) of the total debt was effectively ‘gifted’ by Katanga to Gécamines.

Full Daily Maverick report