Wednesday, November 18, 2020

"Billionaire Gertler Buys Royalty Rights in Congo Cobalt Project"

Dirty deeds done dirt cheap. Both Gertler and Eurasian are among the sharpest-elbowed, least transparent players in African extractive industries.

From Bloomberg:

Billionaire Gertler Buys Royalty Rights in Congo Cobalt Project 

A company controlled by Israeli billionaire Dan Gertler, who is under U.S. sanctions for alleged corruption, bought rights from the Democratic Republic of Congo’s state mining company to royalties from one of the world’s largest cobalt projects.

While the contract was published by the mining company Gecamines in October, it was signed in June 2017 -- six months before the U.S. government blacklisted the businessman for “opaque and corrupt mining and oil deals” in Congo. Gertler has never been charged with a crime and denies any wrongdoing, and he’s hired a number of lawyers in the U.S. to fight the sanctions.

The previously unreported royalty stream relates to Eurasian Resources Group Sarl’s Metalkol project and means Gertler’s companies are entitled to a share of revenue from three of the biggest cobalt mines globally. The 2017 contract adds to similar deals that Gertler companies previously struck with Gecamines at Glencore Plc’s two giant projects in the central African country.

A byproduct of copper mining, cobalt is an essential ingredient in the lithium ion batteries that power electric vehicles and almost three-quarters of the metal is sourced from Congo. Demand for the mineral is forecast to surge in coming years, driven by the shift toward more environmentally friendly transportation.

Global Output

At full capacity, the three mines obliged to pay royalties to Gertler companies could produce more than 70,000 tons of cobalt a year -- that’s about half of total global output in 2019.

Under the terms of the 2017 deal, Gertler’s Multree Ltd. paid Gecamines $55 million to purchase a revenue stream that is worth 2.5% of Metalkol’s net turnover. Metalkol, which uses modern technology to reprocess a massive pile of mining waste, known as tailings, started producing copper and cobalt in late 2018.

A spokesman for Gertler said that, in acquiring the royalties, Multree also inherited a $28 million debt owed by Gecamines to Metalkol, which was accrued when the ERG unit advanced royalty payments to the state miner in 2015 and 2016. Multree is not due to receive its first payment until next year, once Meltalkol has offset that debt by withholding royalties, the spokesman said. The mine produced 51,000 metric tons of copper and 6,700 tons of cobalt last year, according to data published by Congo’s government and ERG.

Contract Transparency

Congolese law requires the publication of all mining-related contracts within 60 days of execution. Gecamines didn’t respond to questions about why it didn’t disclose the agreement with Multree for more than three years or why it didn’t reveal that Gertler’s company took over part of its debt to Metalkol....


Way back in 2016, while thanking the Financial Times' Henry Sanderson for a story that preceded a five-fold move in cobalt I asked what the renamed ERG formerly Eurasian National Resources Corporation (ENRC) was up to:

Big kudos to the FT's Henry Sanderson for recognizing one hell of a story and a small request for the Financial Times: Can you tell us what the old ENRC is up to these days?

In 2018 I repeated the plea, this time to Neil Hume, the FT's natural resources editor.

Here's our last post on Mr. Gertler: 

Tracking Mining Man Dan Gertler's Sanctions Evading, Money Laundering, Government Bribing Business Endeavors

Which has some links to Glencore shenanigans in the DRC.

As for ERG, one of the reasons I'd have preferred the FT did the legwork is that, well, this stuff can get you killed:

Two former colleagues at mining giant ENRC found dead in US hotel

Bodies of James Bethel and Gerrit Strydom, who had both worked for the former FTSE 100 group, discovered in separate rooms in Missouri