(Reuters) - Three Glencore Plc (GLEN.L) executives, including the head of its copper group, have stepped down from the board of subsidiary Katanga Mining Ltd (KAT.TO) after an internal review identified weaknesses in its financial reporting controls, Katanga said on Monday.
Katanga, which operates cobalt and copper mines in Democratic Republic of Congo, said Aristotelis Mistakidis, Liam Gallagher and Tim Henderson had tendered their resignations, effective immediately.
As head of the copper group, one of six groups in Glencore’s metals and minerals unit, Mistakidis is one of Glencore’s most senior executives.
Katanga the three men had cooperated fully with the review. They will be replaced by three other Glencore executives, including Chief Financial Officer Steven Kalmin.
Glencore owns 86 percent of Katanga.
Katanga’s shares, listed on the Toronto Stock Exchange, fell as much as 8 percent in early trade but by midday had recovered to trade flat at C$1.26.
Glencore’s shares fell more than a percent in early trade in London, but recovered later to trade 1.6 percent higher.
A statement from Katanga said the review found it had over-stated copper production by 6,650 tonnes, which was provisionally invoiced to Glencore for $41.9 million.
Glencore’s statement said there was no material impact on its consolidated income or cash flow, but it would be taking steps to strengthen procedures and ensure “the weaknesses identified in the review are addressed and do not re-occur”.
Katanga had said in August it would restate some past financial statements to correct inaccuracies in its recorded copper production during 2014 and 2015.
Katanga has previously disclosed that it is being investigated by the Ontario Securities Commission (OSC). The commission is reviewing whether the company’s previously filed financial statements “contain statements that are misleading in a material respect”.
The OSC is also investigating whether Katanga’s corporate governance practices are adequate and the “related conduct” of certain unnamed company directors and officers, Katanga said.
Scrutiny has increased on Democratic Republic of Congo following a series of investigations by non-governmental organisations and the release of the Paradise Papers - a trove of documents about offshore investments, which named Glencore. Glencore has denied any wrong-doing.
The country’s importance has at the same time increased because it is home to almost 60 percent of the world’s supply of cobalt, a mineral expected to be in strong demand for batteries for electric vehicles.
In addition to Kalmin, the new appointments to Katanga’s board are Mike Ciricillo, responsible for Glencore’s copper smelting and refining, and Tony Moser from Glencore’s finance department.
Reporting by Sanjeeban Sarkar in Bengaluru, Barbara Lewis in London and Nicole Mordant in Vancouver; Editing by Jason Neely, Edmund Blair and Susan Thomas