Glencore’s Kamoto Copper Faces Royalties Dispute Amid Ties to Dan Gertler
A long-standing dispute between a Glencore Plc unit and the Democratic Republic of Congo (DRC) is centered around a deal struck years ago by Israeli businessman Dan Gertler, who has been sanctioned by the US for alleged corruption.
The conflict involves Kamoto Copper Company (KCC), a major copper and cobalt mine owned by Glencore, and concerns royalty payments made to Gertler.
Congo’s mines minister, Kizito Pakabomba, stated that the government believes part of these funds should have been paid to the state rather than Gertler.
Gertler was sanctioned by the US in 2017 for his alleged corrupt dealings in Congo, and the situation is further complicated by the fact that he continues to receive royalties from Kamoto and other mining projects in the country.
According to Congo’s tax agency, DGRAD, Kamoto owes the state more than €800 million ($885 million) in unpaid royalties. The involvement of Gertler, who retains royalty rights in Kamoto, highlights the broader challenges facing the DRC’s mining sector.
His continued presence in the industry has made Western investors wary of entering the country, despite the Biden administration’s push to reduce China’s dominance in the global supply of critical minerals. Most of Congo’s mines are currently operated by Chinese companies.
Congo’s rich copper and cobalt deposits are crucial for the global energy transition, as these so-called “green metals” are essential for electric vehicle batteries and renewable energy infrastructure.
The US views Congo as a key player in reducing China’s control over the supply of critical minerals. However, efforts to attract Western investment have been hampered by Congo’s history of demanding large one-off payments and its association with Gertler, whose involvement has raised concerns due to his sanctions status.
Kamoto Copper is one of the largest mines in Congo, and earlier this year, its local bank accounts were frozen, and tax authorities briefly sealed a warehouse storing metal as part of the ongoing dispute.
The core issue involves the royalties Kamoto pays to Gertler. Minister Pakabomba noted that in addition to these payments, Kamoto also pays a separate set of royalties to the government based on sales. While he declined to go into further detail, he indicated that a resolution to the dispute is near.
DGRAD argues that under Congolese law, 50% of the royalties paid to Gertler should be directed to the national treasury. However, the dispute has raised questions about why the tax agency is pursuing Kamoto for these funds instead of Gertler himself. A Glencore spokesperson declined to comment, and Congo’s finance ministry has yet to respond to inquiries.
Gertler’s Ventora Group acknowledged the dispute but distanced itself from the issue, stating it is a matter between KCC and the tax agency. The group denied involvement and stated it was unaware of the details or merits of the claim.
Gertler acquired his royalty rights in Kamoto from Congo’s state mining company Gecamines over a decade ago. Despite selling his minority stake in the mine, he retained a 2.5% share of its revenue.
His ties to another Glencore-owned mine and Eurasian Resources Group’s project also allow him to benefit from similar royalty agreements. Although Gertler has never been charged with a crime and denies wrongdoing, his dealings in Congo remain contentious.
This is not the first time Gertler’s royalties have caused friction with Glencore. Following US sanctions in 2017, the company halted payments but resumed them in euros in 2018 after Gertler filed a lawsuit.
Glencore said it resumed payments to avoid the potential seizure of its Congolese assets, underscoring the delicate balance companies face when navigating Congo’s complex mining environment.
