By Archie Hunter / April 30, 2018 / www.metalbulletin.com /
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Israeli businessman and Democratic Republic of the Congo (DRC) mining magnate Dan Gertler is suing former partner Glencore for just shy of $3 billion in unpaid royalties, Glencore said late on Friday April 27.
Gertler's Ventora Development Sasu alleges Glencore DRC subsidiaries Mutanda Mining and Kamoto Copper Co (KCC) owe approximately $695 million and $2.28 billion respectively in royalties that Glencore has indicated it will not pay due to US sanctions against Gertler and his businesses.
Glencore's Mutanda and KCC copper-cobalt mines have been hit with freezing orders, which authorize bailiffs from the commercial court of Kolwezi in the DRC to lock up assets, bank accounts and mining titles.
"Glencore is assessing the impact of the freezing order on Mutanda and KCC's operations in the DRC, but notes that the freezing orders may materially adversely affect such operations," Glencore said, adding that its subsidiaries would "vigorously contest" the orders.
The lawsuits mean Glencore's copper and cobalt assets in the DRC are now all facing legal action.
DRC state miner
G?(C)camines is looking to dissolve KCC through legal proceedings initiated against fellow Glencore subsidiary and KCC operator Katanga Mining last Tuesday.
Cobalt risk
The legal action also means that a large amount of global cobalt supply is at risk; Glencore's African copper-cobalt mining assets, which also include Mopani in Zambia, produced 23.9 tonnes of cobalt last year, 21% of global supply.
Concerns that ballooning electric vehicle battery demand will lead to cobalt market supply deficits have already driven up cobalt prices to decade-highs.
Metal Bulletin assessed the high-grade cobalt price at $43.70-44.55 cents per lb on Friday April 27, up 20.2% from an assessed price of $36-37.40 per lb at the beginning of the year.
DRC dealings
Gertler rose to international notoriety as a link man between international mining companies and DRC President Joseph Kabila and was a prominent party in the company's early investments developing Katanga and Mutanda.
Glencore bought out Gertler's shares in its DRC assets for $960 million in February last year, but royalty contracts remained.
Gertler has been the target of US sanctions for over a year but was made a "Specially Designated National" by the United States in December, after which Glencore and its subsidiaries stopped payments to him and companies he owns.
The handling of Katanga and dealings with Gertler in the DRC also led to Glencore's head of copper Aristotelis "Telis" Mistakidis resigning from his board seat at Katanga Mining last year and Mike Ciricillo moving into a newly created role as head of copper assets at Glencore.