CRIMINAL CAPITALI$M
A GLENCORE TRADITION
Bloomberg News | October 3, 2024
Gertler, originally a diamond trader, amassed his fortune mostly by buying mining assets from the DRC at greatly discounted prices, and selling them at great profit. (Image: Screenshot from Bosolo Na Politik Officielle | YouTube.)
A dispute between a Glencore Plc unit and the Democratic Republic of Congo centers around a deal Israeli businessman Dan Gertler struck years ago.
Congo’s mines minister said the spat between authorities and a Glencore-owned copper and cobalt mine revolves around royalty payments the unit makes to Gertler, who the US sanctioned in 2017 over alleged corruption. Congo now says part of the funds should have been paid to the state instead.
Bloomberg reported last week that a tax agency says Kamoto Copper Co. owes the state hundreds of millions of dollars in a royalties row. The involvement of Gertler — who still receives royalties from Congo projects including Kamoto — is a reminder of the challenges his ongoing presence poses in the key producer of minerals needed for the energy transition.
It also highlights why Western firms have resisted US encouragement to invest in Congo, where many mines are owned by Chinese firms. Washington wants the West to finance projects there to tackle Beijing’s dominance in critical metals, but progress has been hit by a range of issues. They include Congo’s history of demanding large one-off payments, and the continued involvement of Gertler that makes some investors wary of doing business there because of the sanctions.
Congo’s high-grade deposits of copper and cobalt are some of the world’s most important sources of so-called green metals. President Joe Biden’s administration views the country as a key battleground in its drive to reduce China’s dominance in mining and processing critical minerals.
Kamoto is one of the largest mines in Congo. A tax agency known by its French acronym DGRAD says it owes the state more than €800 million ($885 million), people familiar with the matter have said. After the unit’s local bank accounts were frozen earlier this year, tax collection staff recently also briefly sealed off a warehouse where the company was storing metal, the people said.
The payments at the center of the spat relate to transfers Kamoto makes to Gertler, Mines Minister Kizito Pakabomba said in an interview in New York on Friday. (Kamoto also pays a different set of royalties based on sales which go directly to the government.)
“These are Dan Gertler’s royalties,” he said, declining to go into further detail about the dispute. The impasse is moving in the right direction and an agreement between the parties “has almost been reached,” Pakabomba said.
Mine payments
DGRAD’s position is that local laws mean that 50% of the royalties paid to Gertler should go to the nation’s Treasury, according to people familiar with the matter who asked not to be identified.
A Glencore spokesman declined to comment. A spokesman for Congo’s finance ministry, which oversees DGRAD, didn’t respond to questions from Bloomberg, including on why it’s requesting the funds from Kamoto rather than Gertler.
Gertler’s Ventora Group said that it’s aware of a dispute, but that it is a matter between the tax agency and Kamoto. “It does not involve Ventora Group, we do not know what it relates to, any other details or the merits of such claim.”
Gertler kept royalty rights in Kamoto and another nearby mine belonging to Glencore — equal to about 2.5% of revenue — after selling his minority holdings before he was sanctioned by the US. He also benefits from a similar arrangement at another project owned by Eurasian Resources Group.
Under a deal cut with Congo’s government in 2022, he agreed to hand back some assets in exchange for help lobbying the US to lift sanctions, though still retained royalties. Gertler, who acquired the Kamoto rights from Congo’s state miner Gecamines about a decade ago, has never been charged with a crime and denies any wrongdoing.
The current dispute with tax authorities isn’t the first time Gertler’s royalties have caused problems for Glencore. After halting transfers amid sanctions, the company resumed payments to him in 2018 — in euros — following a lawsuit filed by Gertler. Glencore said at the time the decision was the “only viable option to avoid the material risk of seizure” of its Congolese mines.
(By William Clowes, Michael J. Kavanagh and Thomas Biesheuvel)
Bloomberg News | October 3, 2024
Gertler, originally a diamond trader, amassed his fortune mostly by buying mining assets from the DRC at greatly discounted prices, and selling them at great profit. (Image: Screenshot from Bosolo Na Politik Officielle | YouTube.)
A dispute between a Glencore Plc unit and the Democratic Republic of Congo centers around a deal Israeli businessman Dan Gertler struck years ago.
Congo’s mines minister said the spat between authorities and a Glencore-owned copper and cobalt mine revolves around royalty payments the unit makes to Gertler, who the US sanctioned in 2017 over alleged corruption. Congo now says part of the funds should have been paid to the state instead.
Bloomberg reported last week that a tax agency says Kamoto Copper Co. owes the state hundreds of millions of dollars in a royalties row. The involvement of Gertler — who still receives royalties from Congo projects including Kamoto — is a reminder of the challenges his ongoing presence poses in the key producer of minerals needed for the energy transition.
It also highlights why Western firms have resisted US encouragement to invest in Congo, where many mines are owned by Chinese firms. Washington wants the West to finance projects there to tackle Beijing’s dominance in critical metals, but progress has been hit by a range of issues. They include Congo’s history of demanding large one-off payments, and the continued involvement of Gertler that makes some investors wary of doing business there because of the sanctions.
Congo’s high-grade deposits of copper and cobalt are some of the world’s most important sources of so-called green metals. President Joe Biden’s administration views the country as a key battleground in its drive to reduce China’s dominance in mining and processing critical minerals.
Kamoto is one of the largest mines in Congo. A tax agency known by its French acronym DGRAD says it owes the state more than €800 million ($885 million), people familiar with the matter have said. After the unit’s local bank accounts were frozen earlier this year, tax collection staff recently also briefly sealed off a warehouse where the company was storing metal, the people said.
The payments at the center of the spat relate to transfers Kamoto makes to Gertler, Mines Minister Kizito Pakabomba said in an interview in New York on Friday. (Kamoto also pays a different set of royalties based on sales which go directly to the government.)
“These are Dan Gertler’s royalties,” he said, declining to go into further detail about the dispute. The impasse is moving in the right direction and an agreement between the parties “has almost been reached,” Pakabomba said.
Mine payments
DGRAD’s position is that local laws mean that 50% of the royalties paid to Gertler should go to the nation’s Treasury, according to people familiar with the matter who asked not to be identified.
A Glencore spokesman declined to comment. A spokesman for Congo’s finance ministry, which oversees DGRAD, didn’t respond to questions from Bloomberg, including on why it’s requesting the funds from Kamoto rather than Gertler.
Gertler’s Ventora Group said that it’s aware of a dispute, but that it is a matter between the tax agency and Kamoto. “It does not involve Ventora Group, we do not know what it relates to, any other details or the merits of such claim.”
Gertler kept royalty rights in Kamoto and another nearby mine belonging to Glencore — equal to about 2.5% of revenue — after selling his minority holdings before he was sanctioned by the US. He also benefits from a similar arrangement at another project owned by Eurasian Resources Group.
Under a deal cut with Congo’s government in 2022, he agreed to hand back some assets in exchange for help lobbying the US to lift sanctions, though still retained royalties. Gertler, who acquired the Kamoto rights from Congo’s state miner Gecamines about a decade ago, has never been charged with a crime and denies any wrongdoing.
The current dispute with tax authorities isn’t the first time Gertler’s royalties have caused problems for Glencore. After halting transfers amid sanctions, the company resumed payments to him in 2018 — in euros — following a lawsuit filed by Gertler. Glencore said at the time the decision was the “only viable option to avoid the material risk of seizure” of its Congolese mines.
(By William Clowes, Michael J. Kavanagh and Thomas Biesheuvel)
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