Fortune Minerals : COBALT NEWS

Bloomberg - February 24, 2021

Middleman made $40 million from Congo minerals within weeks Investor denies NGO allegations he represents billionaire

around the world. Congo dominates global production of cobalt, a key ingredient in the rechargeable batteries that power electric vehicles.

A transfer of lucrative cobalt and copper assets by the Democratic Republic of Congo's state mining company enabled a little-known investor to make $40 million within weeks. The transaction and almost immediate resale of control of the assets to Eurasian Resources Group Sarl is the latest deal in Congo to face scrutiny by anti-graft campaigners. Alleged corruption in mining transactions in the central African nation has led to financial sanctions and multiple ongoing investigations by law-enforcement agencies around the world…Congo dominates global production of cobalt, a key ingredient in the rechargeable batteries that power electric vehicles. Luxembourg-registered ERG owns one of the largest copper-cobalt projects in the country, which is at the forefront of the company's efforts to position itself as a major player in the revolution toward more environmentally friendly transportation…A little over two years ago, ERG expanded its pool of raw materials by striking a deal in which French national Elie-Yohann Berros played a highly profitable intermediary role…On Nov. 7, 2018, state miner Gecamines leased rights to process billions of dollars worth of copper and cobalt reserves to Evelyne Investissement SAU, an entity Berros had created two months earlier, according to a copy of the agreement, Congolese corporate records and an ERG filing. In exchange, Evelyne made an initial $10 million payment, the documents show. Later in the same month, Gecamines signed off on Berros' sale of 51% of Evelyne to ERG for $50 million, according to ERG's annual report…The state miner still stands to gain hundreds of millions of dollars from the deal through royalties and a signing bonus, according to the contract…ERG and Berros declined to comment on what value he brought to the deal with the state miner and why ERG needed him as an intermediary to acquire the rights. ERG's spokeswoman declined to clarify when the company first expressed an interest in securing the minerals that Gecamines transferred to Evelyne…'It is deeply concerning that ERG did not purchase this asset from Gecamines directly, but instead appears to have acquired it via Berros, a man with no public track record in DRC,' said Margot Mollat, a campaigner at Global Witness, a London-based corruption-watchdog that has investigated Berros' business activities. 'As a result, it appears that Gecamines may have lost out and within weeks Berros walked away $40 million richer.'..While the financial details of the transactions in late 2018 haven't previously been reported, in July Bloomberg and anti-corruption organizations revealed links between Berros and Israeli billionaire Dan Gertler, who was sanctioned by the U.S. government in December 2017 for alleged corruption in Congo, which Gertler has denied. Global Witness and the Platform to Protect Whistleblowers in Africa, known as Pplaaf, described Berros as a 'frontman' for Gertler in a joint report…Placing sanctions on the businessman, the U.S. Treasury said Gertler had used his friendship with former Congolese President Joseph Kabila to operate as a 'middleman' between multinational mining companies and the state. The Evelyne transactions took place a month before elections to choose Kabila's successor after nearly two decades in power…ERG holds assets, including several mining projects in Congo, that belonged to Eurasian Natural Resources Corp., a company that was listed on the London Stock Exchange. The U.K.'s Serious Fraud Office has been investigating ENRC since 2013 for alleged corruption in its deals in Congo, including several where Gertler acted as an intermediary acquiring assets from Congo's state-owned mining companies before ERG bought them at a higher price within months…According to ERG's 2019 annual report, the reserves Gecamines leased to Evelyne, which are known as tailings…The tailings, which stretch for miles in grayish heaps just outside the southeastern mining hub of Kolwezi, are a reminder of Gecamines' glory days. Now -- like most of Gecamines' most valuable assets -- they're under private control. Evelyne's five tailings dumps overlap with permits controlled by Glencore Plc, Ivanhoe Mines Ltd., and the Sicomines project, a $3.2 billion joint venture between Gecamines and several Chinese state-owned companies…ERG is already processing another tailings dump at its giant Metalkol project not far from the site of Evelyne's resource. Gertler owns the rights to a 2.5% royalty on Metalkol's net turnover, which one of his companies bought from Gecamines in 2017. The ERG spokeswoman declined to say if Metalkol's facility will treat Evelyne's copper and cobalt.