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Glencore is under fresh pressure to explain steep discounts obtained on contract fees related to mining assets it acquired through joint ventures in the Democratic Republic of Congo.
Resource Matters, a non-profit organisation based in Brussels, has delved into deals revealed in the Paradise Papers that show Glencore, the Swiss mining and trading company, paid $440m less than the market rate for copper and cobalt reserves.
The fees, payable over several years, would have been shared by the government of one of Africa’s most resource-rich but impoverished countries, and by Gécamines, the state-controlled mining company.
One of the main discounts was secured by Dan Gertler, an Israeli tycoon. Although not identified by name, an Israeli businessman matching his description was implicated in the payment of bribes to Joseph Kabila, the DRC president, according to settlement documents released last year by US authorities in a scandal involving Och-Ziff, the New York hedge fund.
Mr Gertler has denied any wrongdoing. The DRC has rejected the allegations of bribery and praised Mr Gertler’s commitment to the country.
The Paradise Papers, 13.4m documents leaked this month, revealed that in 2008 Gécamines asked for a “signing bonus” of $585m from Komoto Copper and Cobalt (KCC) and DRC Copper and Cobalt Project (DCP) when it renegotiated contracts with foreign investors.
This was calculated using a rate of $35 per tonne of copper reserves, the price requested of all investors. KCC and DCP controlled more than 16.6m tonnes.
But the Paradise Papers revealed that the two companies paid a total of $140m, less than a quarter of the figure that would have been paid had the $35 benchmark rate applied.
DCP would have paid $240m for its flagship site, Kamoto Oliviera Virgule, at the $35-a-tonne rate, but Mr Gertler, who was asked to negotiate for DCP by its board, brokered an agreement to retain the original payment of $5m, the Research Matters analysis found.
“DCP’s mine was one of the richest of the country,” said Elisabeth Caesens, director of Resource Matters and an expert on the DRC mining industry. “DCP’s investors, including Glencore and Dan Gertler, should explain how they convinced the Congolese negotiators to agree to a signing bonus rate that was almost 50 times less than what virtually all other foreign investors accepted.”
KCC, meanwhile, secured a zero signing bonus on promised reserves of 4m tonnes of copper and 200,000 of cobalt, Ms Caesens said. It paid $135m in a signing bonus for its other reserves.
Glencore controlled neither company in 2008. But it now controls Katanga Mining, into which both KCC and DCP were absorbed. Glencore said in response to the leaks that the $140m payment was “essentially correct”.
“During the negotiations, Gécamines put forward various positions regarding the [bonus] it believed was payable by KCC, including amounts of $585m and $200m,” Glencore said. “Katanga successfully maintained its position that the sum it had previously announced was essentially correct.”
It declined to add to this statement on Tuesday.
Mr Gertler declined to comment. Gécamines did not respond to requests for comment.
Glencore announced this year that it would pay $534m to Mr Gertler for his stakes in the mines.