DRC's KCC Sealed and Production Halted by Tax Authorities!

       According to local media in the DRC on July 10, the country’s General Directorate of Taxes (DGI) sealed the offices and some facilities of Kamoto Copper Company (KCC) in Kolwezi, Lualaba Province, on July 9. The DGI stated that KCC is involved in a tax arrears case amounting to nearly $3 billion. The sealing action led to the evacuation of some personnel and a temporary halt to copper and cobalt production activities at the relevant sites. The extent and duration of the sealing, as well as its actual impact on the mine and smelting systems, remain to be further confirmed.

              Local media, citing sources close to the matter, reported that the tax authority and relevant companies under Glencore had been in negotiations over the dispute for nearly 12 months. The DGI allegedly questioned the relevant enterprises for understating transfer prices in mineral export transactions and transferring some value to overseas affiliates. Glencore denied the tax authority’s assessment, calling the claims “utterly baseless.” Therefore, the approximately $3 billion is still the amount sought by the DRC tax authority and has not yet been finalized as a judicial ruling.

             Public information shows that KCC is a large copper-cobalt project controlled by Glencore, with its main products including copper cathode and cobalt hydroxide. According to SMM, KCC’s copper cathode production has been around 190,000 mt in each of the past two years. If the sealing measures continue and materially affect production or product shipments, it is expected to cause periodic disruptions to copper and cobalt supply from the DRC. Going forward, close attention should be paid to the progress of KCC’s operational recovery and the resolution of the tax dispute.