Globe Metals & Mining says its Malawi subsidiary has been named as a defendant in a legal battle it knew nothing about.

Globe Metals and Mining (Africa) is a defendant in a legal case started in the High Court of Malawi in August last year by 243 members of the Kanyika Community.

Globe (ASX:GBE) said in an ASX release on Friday that “no court papers have ever been served on the company, either to the parent company, any of its subsidiary companies, any director, or any employee”.

Shares slid 11.1 per cent to 1.6c on the back of the news.

The lawsuit alleges that Globe Africa carried out exploration and mining activities on an area of its Kanyika niobium project in Malawi without honouring its compensation obligations to the Kanyika Community.

The Kanyika Community is seeking compensation and damages from the Malawi government and Globe Metals and Mining (Africa).

GBE shares over the past three months.
GBE shares over the past three months.

Globe has denied the claims and is in talks with the government and the Attorney General of Malawi over the matter.

“The company will make no comment on the proceedings while the matter is before the court,” Globe said.

The company only just restarted work on its Kanyika project in February as the prospects for niobium start to pick up.

Niobium is added to steel to enable steel mills to produce high-margin products through enhanced flexibility, weight reduction and strength.

However, while more than 90 per cent of niobium produced is used in steel, its ability to boost the driving range of electric vehicles is spurring on a substantial increase in demand.

> Bookmark this link for small cap breaking news
> Discuss small cap news in our Facebook group
Follow us on Facebook or Twitter
Subscribe to our daily newsletter