Kinshasa, DRC — 07 October 2013 – Gecamines “’ the state-owned mining company of the Democratic Republic of Congo (DRC) “’ may sell its 20% stake in Glencore Xstrata plc’s Kamoto Copper Company (KCC) in order to raise money for other projects.
“We’ve been in discussions with 14 groups who’ve gone through a tender and the process is ongoing,” said chairman Albert Yuma in an interview here with Bloomberg News. “Glencore’s Katanga Mining Limited, which owns 75% of KCC, would have right of first refusal of any sale, he added.
KCC’s copper output may climb to 300,000 metric tons by the end of next year, according to Glencore’s 2012 annual report, which would make it the DRC’s biggest miner. The company produced 93,000 tons of copper in metal and concentrate form and 2,100 tons of cobalt last year, it said. A January Bank of America Merrill Lynch report on the merger between Glencore and Xstrata plc valued Katanga Mining’s stake in KCC at US$5.2 billion.
Yuma said KCC had missed production targets for the past five years and had too much debt after investing in an underground mine and plant expansion, to be profitable for Gecamines. The company’s shares in KCC “are not strategic,” he said. “The value today of KCC is now negative.”
Glencore spokesman Charles Watenphul declined to comment.
Israeli billionaire Dan Gertler’s Fleurette Group is among the 14 bidders for Gecamines’ stake, Yuma said. He did not immediately provide the names of other bidders. Gertler already has shares in Katanga Mining and bought Gecamines’ stakes in Glencore’s Mutanda Kansuki mining project in 2011.
“We don’t comment on speculation,” a spokesman for Fleurette said in an e-mailed response to questions.
Gecamines might halt the sale if it could find financing for its US$2.75 billion reorganisation plan, Yuma said. The company wanted to build a coal-fired power plant and new processing factories to begin exploiting several fully owned mining sites it recently bought from former partners.
To make the company more attractive to investors, Gecamines is spinning off its minority stakes in joint ventures and creating a new offshore company, Yuma said. Payments from its partners including royalties and dividends will flow through the subsidiary, which “will be disconnected from Gecamines’ debt” of about US$1 billion, he added.
Gecamines’ other partners include Phoenix, Arizona-based Freeport McMoRan Copper & Gold Incorporated, London-based Eurasian Natural Resources Corporation (ENRC), and Australia’s Tiger Resources Limited.
Source: Bloomberg News. For more information, click here.