Mining magnate Gertler says he paid US$83m for royalties from Congo's Metalkol

[KINSHASA, Congo] Israeli mining magnate Dan Gertler said on Monday he was behind an US$83 million purchase of royalties for the Metalkol copper and cobalt project in southeast Democratic Republic of Congo from the state mining company Gecamines in 2017.

Gecamines sold its right to 2.5 per cent of the annual royalties from the Metalkol project to Multree, a company registered in the British Virgin Islands, in June 2017, according to a contract published on the Extractive Industries Transparency Initiative (EITI) website on Oct 30.

In a video played to journalists in a Kinshasa cinema, Mr Gertler said he bought the royalties to help Gecamines - which owns 5 per cent of the asset - pay off its debts.

It was not previously public knowledge that Mr Gertler, who is under US sanctions for alleged corruption in mining deals in Congo, had bought the stake. Mr Gertler has denied all allegations of impropriety.

He said that Metalkol was nearing full production and that it would start paying royalties next year.

Majority-owned by a subsidiary of Kazakh mining company Eurasian Resources Group (ERG), Metalkol started production in early 2018.

In its first phase, the tailings project in Haut Katanga province is expected to produce 14,000 tonnes of cobalt hyrdoxide and 77,000 tonnes of copper cathode per year, according to the ERG website.

At current market prices, Mr Gertler's cobalt royalties would be worth US$11.6 million and the copper royalties US$13.7 million per year, according to Reuters calculations. Mr Gertler would recoup his investment in just over three years, although he is not allowed to receive US dollars due to his being under sanctions.

The US government added Mr Gertler and affiliated companies to its sanctions list in 2017, accusing him of using his friendship with Congo's then-President Joseph Kabila to secure sweetheart mining deals.

Mr Gertler said he was offering Congolese individuals an opportunity to share in the royalties, in a scheme that would start before the end of the year.

"It is the first time that you, brothers and sisters, will benefit from the wealth of this country," Mr Gertler said, without providing details.

A spokesman for ERG did not respond to a request for comment. When reached, mines Minister Willy Kitobo declined to comment. Mr Gertler could not be reached for further questions.

REUTERS