AVZ Discussion 2022
- Thread starter GazDix
- Start date
Sheesh!
If that is to be believed, that's some high level attention right there.
I wonder what "ensuring the state gets its fair share" boils down to for us plebs...
Mute22
Regular
Funny, if they followed their own mining code their 'fair share' was already outlined. Now they know the size, they want to change the rules after we take all the risk.
Frank
Top 20
Glencore-Congo mine row tied to sanctioned ex-partner Gertler
A dispute between a Glencore Plc unit and the Democratic Republic of Congo centers around a deal Israeli businessman Dan Gertler struck years ago.
Congo’s mines minister said the spat between authorities and a Glencore-owned copper and cobalt mine revolves around royalty payments the unit makes to Gertler, who the US sanctioned in 2017 over alleged corruption. Congo now says part of the funds should have been paid to the state instead.
Bloomberg reported last week that a tax agency says Kamoto Copper Co. owes the state hundreds of millions of dollars in a royalties row.
The involvement of Gertler — who still receives royalties from Congo projects including Kamoto — is a reminder of the challenges his ongoing presence poses in the key producer of minerals needed for the energy transition.
It also highlights why Western firms have resisted US encouragement to invest in Congo, where many mines are owned by Chinese firms.
Washington wants the West to finance projects there to tackle Beijing’s dominance in critical metals, but progress has been hit by a range of issues.
They include Congo’s history of demanding large one-off payments, and the continued involvement of Gertler that makes some investors wary of doing business there because of the sanctions.
Congo’s high-grade deposits of copper and cobalt are some of the world’s most important sources of so-called green metals.
President Joe Biden’s administration views the country as a key battleground in its drive to reduce China’s dominance in mining and processing critical minerals.
Kamoto is one of the largest mines in Congo.
A tax agency known by its French acronym DGRAD says it owes the state more than €800 million ($885 million), people familiar with the matter have said.
After the unit’s local bank accounts were frozen earlier this year, tax collection staff recently also briefly sealed off a warehouse where the company was storing metal, the people said.
The payments at the center of the spat relate to transfers Kamoto makes to Gertler, Mines Minister Kizito Pakabomba said in an interview in New York on Friday. (Kamoto also pays a different set of royalties based on sales which go directly to the government.)
“These are Dan Gertler’s royalties,” he said, declining to go into further detail about the dispute.
The impasse is moving in the right direction and an agreement between the parties “has almost been reached,” Pakabomba said.
Mine payments
DGRAD’s position is that local laws mean that 50% of the royalties paid to Gertler should go to the nation’s Treasury, according to people familiar with the matter who asked not to be identified.A Glencore spokesman declined to comment. A spokesman for Congo’s finance ministry, which oversees DGRAD, didn’t respond to questions from Bloomberg, including on why it’s requesting the funds from Kamoto rather than Gertler.
Gertler’s Ventora Group said that it’s aware of a dispute, but that it is a matter between the tax agency and Kamoto.
“It does not involve Ventora Group, we do not know what it relates to, any other details or the merits of such claim.”
Gertler kept royalty rights in Kamoto and another nearby mine belonging to Glencore — equal to about 2.5% of revenue — after selling his minority holdings before he was sanctioned by the US. He also benefits from a similar arrangement at another project owned by Eurasian Resources Group.
Under a deal cut with Congo’s government in 2022, he agreed to hand back some assets in exchange for help lobbying the US to lift sanctions, though still retained royalties.
Gertler, who acquired the Kamoto rights from Congo’s state miner Gecamines about a decade ago, has never been charged with a crime and denies any wrongdoing.
The current dispute with tax authorities isn’t the first time Gertler’s royalties have caused problems for Glencore.
After halting transfers amid sanctions, the company resumed payments to him in 2018 — in euros — following a lawsuit filed by Gertler.
Glencore said at the time the decision was the “only viable option to avoid the material risk of seizure” of its Congolese mines.
mining.com
Remark
Top 20
Source: A U.S.-based investor with interests in the DRC 
Context:
During UN General Assembly Week (UNGA) in New York City, I attended an annual dinner and fundraiser for African leaders and Africanists (ie, American foreign policy experts, advocates, and investors who focus on Africa) organized by the Schomburg Center for Research in Black Culture which is held every year during this week. During UNGA, this is one of the premier events that features African leaders and Africanists and this year I learned from event organizers (I am an annual donor to the Center, a key institution in the Harlem neighborhood of Manhattan, where I live with my Congolese wife and family) that US Undersecretary Jose Fernandez and DRC Communications Minister Muyuya would be in attendance. As an active investor in DRC and blogger on DRC matters on Twitter, both men know who I am and that I advocate for the interests of AVZ retail shareholders. For this reason, I decided to approach my engagement of both men strategically by personally approaching one man and using a Schomburg exec, Congolese American, and friend to approach another whilst asking the same 4 questions. I chose these specific 4 questions both because they would elicit newsworthy answers but also relatively detailed ones easily remembered so as to jot down later to create these accounts.
To corroborate their accounts, I followed up with the below sources to view evidence (memos, diplomatic cables, emails, SMS, etc):
What follows below are the questions posed to both men and their answers- which have now all been corroborated by info shared with me by more sources. The part of their answers I could NOT corroborate are not included in the accounts below.
Conversation with Under Secretary Fernandez:
Conversation with DRC Communication Minister Muyaya
Context:
During UN General Assembly Week (UNGA) in New York City, I attended an annual dinner and fundraiser for African leaders and Africanists (ie, American foreign policy experts, advocates, and investors who focus on Africa) organized by the Schomburg Center for Research in Black Culture which is held every year during this week. During UNGA, this is one of the premier events that features African leaders and Africanists and this year I learned from event organizers (I am an annual donor to the Center, a key institution in the Harlem neighborhood of Manhattan, where I live with my Congolese wife and family) that US Undersecretary Jose Fernandez and DRC Communications Minister Muyuya would be in attendance. As an active investor in DRC and blogger on DRC matters on Twitter, both men know who I am and that I advocate for the interests of AVZ retail shareholders. For this reason, I decided to approach my engagement of both men strategically by personally approaching one man and using a Schomburg exec, Congolese American, and friend to approach another whilst asking the same 4 questions. I chose these specific 4 questions both because they would elicit newsworthy answers but also relatively detailed ones easily remembered so as to jot down later to create these accounts.
To corroborate their accounts, I followed up with the below sources to view evidence (memos, diplomatic cables, emails, SMS, etc):
- Two sources within the US State Department Africa division
- Two sources close to the DRC Presidency.
- Two sources at both the Harris and Trump campaigns
- One source at Trafigura
- Two sources close to Gertler
- One source close to Kabila
What follows below are the questions posed to both men and their answers- which have now all been corroborated by info shared with me by more sources. The part of their answers I could NOT corroborate are not included in the accounts below.
Conversation with Under Secretary Fernandez:
- Would you describe the DRC/US relationship as a cold one at this point? Well, it’s definitely not hot. Overall, it remains respectful but I wouldn’t be very honest if I told it in a great place. He (Fatshi, DRC President) doesn’t share the rising anti-Americanism people around him share but he is increasingly skeptical of US intentions. The issue remains Rwanda and things you know. We aren’t going to sanction Kagame or his key people.
- Is there anything we can do re: Rwanda that could help Fatshi? Yeah and we’re doing it. We’ve been providing DRC’s army with intel- human and otherwise- on the RDF’s movements and supply routes to M23. And it made a real difference in the fight.
- I get the sense Lobito has helped change perceptions in the region about US willingness to partner but has it really? It is in the region, yes. Biden’s visit to Angola wil be pretty significant and all the leaders of the region will join him. Trafigura is the big player here and they are driving things on the ground. But US taxpayers provided the down payment and that’s no small thing.
- What seems to be the holdup on things like the Gerler royalties and AVZ? I mean, you know the issue with Gertler! At this time, it is out of our hands politically which Kinshasa only recently understood. DOJ (US Department of Justice) is working the case and either Gertler will bend or he won’t. My understanding is he won’t settle because it will expose Kabila and neither Kabila nor Fatshi want that to happen given their gentleman’s agreement. It's sad these assets lie stranded but Gertler is gonna have to choose between his bank account and Kabila, which he’s never had to do before. On AVZ, we made it clear both in the recent meeting I had and the one with Tony with investors in NYC that we expect to get resolved soon. And the primary reason, as I shared with them, is that Harris and Trump will take a much more aggressive approach with Kinshasa if it does not resolve it amicably and fairly. Our team (Biden Administration) has been and will be patient as we know it's difficult. But I said to them and I’m saying to you it's got to be resolved or things will get worse under Harris or Trump for all parties involved.
Conversation with DRC Communication Minister Muyaya
- Would you describe the DRC/US relationship as a cold one at this point? It is neither. It’s a relationship and those change with the times. We are not Mali or Niger. But we are also not Kenya or Angola. The relationship exists and we value it in Kinshasa.
- Is there anything we can do re: Rwanda that could help Fatshi? There could always be more and we will continue to ask Americans for more. We continue to want the Americans to sanction key officials in Kigali as we believe it will make the primary difference in our battle with M23. What I don’t understand from the Americans is this logic of appeasement. They don’t do this with Russia with Ukraine but they want to do it with Rwanda. I am not able to explain this logic to our compatriots because there is no logic to it. We hope with Harris or Trump there will be a change in policy.
- I get the sense Lobito has helped change perceptions in the region about US willingness to partner but has it really? Yes! It has changed perceptions along with the investments in energy from the Americans. It’s been very surprising, actually. At first, it was unbelievable that Americans would invest in railroads in Congo. Railroads! But this is what is happening. We are most excited about this as a new and improved trade route- not just simply upgrading a railroad and roads. This region of Congo is now going to be connected to the President’s region of Kasai which will mean more prosperity in this part of Congo. We were all surprised by PGII and Congo being the site of its largest investment to date. Our plan is to pair our AGOA (African Growth and Opportunity Act, a Clinton-era law that is renewed every 10 years (next renewal is next year) and that provides duty and quota free access to the US market for select African nations that maintain democracy and the rule of law) plan with the corridor so we have synergies.
- What seems to be the holdup on things like the Gerler royalties and AVZ? With Gertler everything is always complicated isn’t it?! We now understand this matter is not in Biden’s hands but the Department of Justice. Our position has not changed. We need the US to drop the charges against Gertler now that he has made a deal with our government for these assets. But we understand better now that Biden has no authority over this file. On AVZ, I can say there will be a resolution soon for all the primary parties. We made this clear to both Undersecretary Fernandez and to investors with Blinken. It’s not my portfolio so I don’t know when the situation will be resolved. I told Blinken that ensuring the state gets its fair share will be important in resolving this file.
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