Congo State Miner Gave Royalties to Israeli Billionaire Dan Gertler

Democratic Republic of the Congo president Joseph Kabila greets Israeli billionaire Dan Gertler

The Democratic Republic of Congo state mining company Gecamines has sold its 2.5% royalty stream in a copper mine owned by Swiss company Glencore to Africa Holdings, which is linked to Israeli billionaire Dan Gertler.
Such sales, usually for a capital sum representing the discounted value of their future potential, are a typical method of financing, or obtaining liquidity, in the mining industry. Since the mine is not currently producing the Democratic Republic of Congos tax and other revenues from the mine have been impacted adversely.
The mine itself has not been producing any ore since September 2015 as it undergoes extensive refurbishment, in a period of world wide over capacity during weak commodity markets. A date for starting up again remains uncertain hence the sale of the royalty stream may make good sense for the state mining company, though the terms of the sale remain undisclosed.
However this has not prevented activist organization Global Witness from criticizing the deal, as a possible abuse. They have provided no real evidence however as they do not know the terms of the deal either.

Reuters reports: Controversial deals

According to Reuters, it was not clear in the contract whether Gecamines received any compensation for ceding the royalty rights to AHIL, whose address in the contract is listed in the Cayman Islands, although Fleurette said it did pay an unspecified amount.

Glencore suspended production at KCC, the third-largest copper mine in Africa’s largest producer of the metal, in response to a global downturn in prices.

It says it expects to resume production in early 2018.

As a result, Fleurette said, it expects to lose a significant amount of money on the deal.

Global Witness stood by its calculation of the value of the deal, saying it was based on information on the website of the Toronto Stock Exchange, where KCC is listed.

“This shows projected potential royalty payments for the life of the mine as totalling $1.596bn.

Gertler has been at the centre of several controversial Gecamines sales before.

According to the Africa Progress Panel, headed by former U.N. Secretary-General Kofi Annan, Congo lost out on $1.36bn in potential revenue between 2010 and 2012 in five mining deals involving Gertler.

He denied any wrongdoing in those deals.

Gertler has long denied paying bribes and says his investments have contributed to Congo’s economic development.

 

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