07/02/2024
Financial Times: US sought Congo mines deal for Swiss trader Mercuria
https://www.ft.com/content/956661bf-b7d5-4226-9ff1-5d68544d219b
Plan includes relaxing sanctions on Israeli billionaire to counter Chinese control of critical minerals
The US tried to facilitate a deal for Swiss trading house Mercuria to acquire copper-cobalt mines in the Democratic Republic of Congo in a transaction that hinged on Washington lifting sanctions against controversial Israeli billionaire Dan Gertler.
The unusual US initiative, spearheaded by President Joe Biden’s senior energy adviser Amos Hochstein, reflects the increasingly fierce competition between the US and China for access to the minerals needed for clean energy infrastructure.
Geneva-based Mercuria was among companies identified by the US State Department as a potential buyer for the mines. It held talks last year with the current owner, Kazakh-controlled Eurasian Resources Group, said four people with knowledge of the discussions.
The US government has rarely intervened in international mining projects so directly, but President Joe Biden’s administration has made access to critical metals a foreign policy priority.
China already has a dominant position in the mining and processing of many metals, particularly cobalt, and several Chinese companies have previously expressed interest in acquiring ERG’s Congolese mines.
Under one of the proposals discussed last year, Mercuria would have acquired all of ERG’s projects in the country, except its oldest project Boss Mining. But the parties could not agree on the value of the assets, particularly given the falling price of cobalt, the people said. Prices have halved to $16.5 a pound in the past two years.
The US would still like to facilitate a sale to a US-friendly buyer and a future deal with Mercuria is not off the table, two of the people said.
Improved US access to copper and cobalt is deemed so important that the Biden administration is proposing to lift its restrictions against Gertler in order to facilitate a sale.
Gertler was hit with sanctions by the US Treasury in 2017 for alleged corrupt dealing in Congo, but retains royalty streams from three mines, including ERG’s Metalkol. US officials say this has made it difficult for US-friendly companies to invest, as they are concerned about legal risks.
Under the proposed agreement with Gertler, the US would grant him licences to sell the royalty streams and any other assets back to the Congolese government for at least $300mn. It would then restore his access to the US financial system once he has relinquished all his investments in Congo, the FT has reported.
The Gertler proposal has provoked criticism from civil society groups and at least four US lawmakers, who warned in May that lifting the restrictions in a deal that further enriched the billionaire would undermine the credibility of the US sanctions regime.
Anneke Van Woudenberg, executive director at the non-profit group RAID, which has tracked the Gertler case, questioned why the US was still considering lifting the sanctions if there was no immediate opportunity for a US-friendly company to acquire the mines.
“It’s hard to see who benefits from this deal to ease sanctions, apart from Mr Gertler,” she said.
US officials believe, however, that the Gertler proposal has already resulted in new supply contracts between the ERG mines and western buyers, who were now less concerned about the risks of dealing with the projects given the evidence of US engagement.
The US state department, Mercuria, ERG and Gertler, who has consistently denied any wrongdoing, declined to comment.
Plan includes relaxing sanctions on Israeli billionaire to counter Chinese control of critical minerals
