Why did Tesla not consult with the US Treasury before signing the Precautionary Statement Agreement under US law regarding these payments to Gertler? ”
At the average price over the past year, it would cost Tesla around $ 191 million to purchase 6,000 tonnes of cobalt, which would bring Gertler’s annual royalties on the contract to between $ 4 million and $ 5 million.
Buying cobalt in Glencore’s projects in Congo not only raises ethical issues but also creates legal risks for American companies like Tesla since part of the money paid goes to a sanctioned entity, ”said Elisabeth Caesens. , director of the Brussels transparency group Resource Matters, which has studied the Congolese mining industry for over a decade.
“Did he consult with the US Treasury before signing the Precautionary Statement Agreement regarding these payments to Gertler?”
Tesla did not respond to questions sent by email, and Glencore and Gertler both declined to comment on the matter.
US companies are prohibited from doing business with sanctioned entities, such as Ventora Development Sasu, the Gertler company that receives royalties from Glencore’s mines in Congo.
Sanctions experts have offered divergent views on the legal risk to a company in Tesla’s predicament. Glencore suspended royalties to Gertler in response to the sanctions but resumed paying in euros in mid-2018 to resolve an issue. lawsuit brought by the businessman. On the day Glencore announced its decision, the United States named 14 additional companies controlled by Gertler, including Ventora.
At the time, Glencore said it discussed the matter with US and Swiss officials, but declined to confirm whether the Treasury approved the decision. Fulfilling contractual obligations to Gertler was the “only viable option for the company to avoid the significant risk of foreclosure” of its mines, the company said two years ago.
Less than three weeks after Glencore resumed paying royalties to Gertler, the US Department of Justice ordered the company to produce documents relating to possible corruption in Congo, Nigeria and Venezuela. The British and Swiss authorities have also opened investigations. Glencore said the Swiss investigation concerned the alleged “failure to put in place organizational measures to prevent alleged corruption in the Congo,” and that it was cooperating with authorities in the three countries.
Gertler’s rights to royalties from two copper and cobalt mines in Congo are his only known financial ties to the world’s largest commodities trader. After a decade as a corporate partner, Glencore bought out Gertler’s minority stakes in both projects in early 2017.
Gertler also benefited from the settlement two years ago of a dispute between Glencore and Gécamines that arose after the state-owned mining company threatened to dissolve Kamoto’s mine contract over its indebtedness.
In addition to the cancellation of billions of dollars in loans by Glencore, Kamoto waived compensation for the deposits he had ceded to Gécamines by withholding royalties and dividends from 2019. Since the royalties had been transferred in Gertler, he is entitled to win them without interruption until the Kamoto mine is exhausted.
Gertler could harvest much more than he paid for the rights. In the lawsuit he launched in 2018 after Glencore suspended the flow of the royalties, Gertler said they were worth $ 2.3 billion – about 15 times what he had agreed to buy them for.
Glencore’s goal is for the Kamoto mine to produce an average of 300,000 tonnes of copper and 30,000 tonnes of cobalt each year from 2022 until the mine runs out, which is expected to last more than 20 years, according to the researchers. company statements. Last year, Kamoto generated $ 1.39 billion in revenue from the production of over 230,000 tonnes of copper and 17,000 tonnes of cobalt.
At the average price over the past year, it would cost Tesla around $ 191 million to purchase 6,000 tonnes of cobalt, which would bring Gertler’s annual royalties on the contract to between $ 4 million and $ 5 million.Become a Sponsor