Deciphering the $440 million discount for Glencore’s DR Congo mines

In early November 2017, the Paradise Papers – a massive leak of confidential corporate documents – revealed that a company currently operated by Glencore, the Swiss multinational commodities and mining company, negotiated a signing bonus in 2008 for a very valuable mining complex in the Democratic Republic of Congo that was $440 million less than what Congo’s state-owned miner Générale des Carrières et des Mines (Gécamines) had asked for.[i] The signing bonus was also four times less than the rate virtually all of the company’s peers had agreed to for their access to Congo’s copper reserves.[ii]

Congo is one of the poorest countries in the world; at the time, $440 million represented more than Congo’s entire education budget.[iii] Documents leaked through the Paradise Papers also indicate that the discount was obtained with the help of the controversial Israeli businessman Dan Gertler, who is known to be a close friend of Congo’s President Joseph Kabila. Several organizations and governments have investigated serious allegations regarding Gertler’s involvement in high-level corruption, according to Bloomberg News and other media outlets.[iv] Gertler and his holding have systematically denied any wrongdoing.

Glencore responded to media reports about the Paradise Papers revelations by arguing that the signing bonus amount was “essentially correct,”[v] and that the terms were set before Gertler’s involvement in the negotiations.

Resource Matters analyzed Glencore’s response and comes to a different conclusion. The discount is real, and it was a result of several underlying factors.

The most important one relates to the KOV open pit mine, an extremely rich copper-cobalt deposit and one of the first that Gertler and his associates acquired in Congo’s copper belt.[vi] Civil society groups, lawyers, and members of Congo’s parliament criticized the contract for KOV during initial negotiations in 2004 and 2005; they claimed the deal failed to provide a fair share of the revenues for Congo.[vii]

Congolese authorities decided to renegotiate the contract along with dozens of other mining deals from 2007 to 2009, in an attempt to harmonize compensation for the mines across the sector for the Congolese state-owned companies.[viii] One of those standardized benefits was the signing bonus. For KOV, the bonus should have been $240 million according to the sector-wide standard. Instead, contractual documents show that the investors only paid $5 million, or 48 times less than the applicable rate.

KCC’s reserves consisted of different packages, each of which were treated differently. Only the certified reserves in dark green yielded a signing bonus.

This note first describes the context in which the signing bonus negotiations took place in 2007 to 2009. It then zooms in on how those negotiations played out for KCC, a company which got access to some of the best deposits of Congo’s copper belt and is currently operated by Glencore. KCC only paid a $140 million signing bonus rather than the initial $585 million Gécamines had asked for as a result of several discounts. First, excluding the KOV open pit mine from the calculations reduced the bonus by at least $235 million. Second, Glencore and the other KCC shareholders will not be paying any signing bonus for the 4 million tonnes of copper reserves that Gécamines has promised to find for KCC. If discovered, this should have generated an additional $140 million bonus, a considerable amount that the Congolese state-owned company will no longer receive. Finally, KCC seems to have relied on a different definition of “reserves” than most other investors when calculating the bonus for the remaining reserves, leading to an extra $65 million discount.

The DRC negotiated its signing bonuses as $35 per tonne of copper. Most other joint ventures accepted this rate — averaging at almost $33 per tonne. In contrast, KCC’s reserves yielded $23,5 per tonne and DCP a mere $0,73 per tonne. KCC is also entitled to almost 4 million extra tonnes of copper which – if found – will not yield any signing bonus.

Glencore told Resource Matters that it would not provide any further on-the-record comments on this issue, while Gertler’s Fleurette group did provide substantive answers to questions, which are reflected in the note.

Resource Matters calls on Glencore, the Fleurette group, and other investors involved in the negotiation of this signing bonus to clarify why and how they became entitled to such a significant discount.

Read the full analysis here:Resource Matters – The $440 million discount on Glencore’s DR Congo Mines – 2017

Un résumé en français est disponible ici: Resource Matters – Rabais de $440 million pour les mines de Glencore en RDC – Résumé FR.

[i] Will Fitzgibbon et al, Room of Secrets reveals Glencore’s Mysteries, November 5, 2017, available at

[ii] The Carter Center, A State Affair – Privatizing Congo’s Copper Sector, November 3, 2017, available at [Hereinafter “The Carter Center, A State Affair, 2017”].

[iii] DRC, Budget 2010 – Synthèse des dépenses par fonction, February 5, 2010, 2.

[iv] See, e.g., Global Witness, Secret Sales, series of publications available at; Africa Progress Panel, Africa Progress Panel, Equity in Extractives: Stewarding Africa’s Natural Resources for All: Africa Progress Report 2013, 2013; Tom Wilson, SFO Probes Israeli Billionaire, Ex-ENRC Directors Over Congo, Bloomberg News, December 5, 2016; U.S. Securities and Exchange Commission, Administrative Proceedings File No. 3-17595 in the matter of Och-Ziff Capital Management Group LLC, OZ Management LP, Daniel S. Och and Joel M. Frank, September 29, 2016; United States of America vs. Och-Ziff Capital Management Group LLC, Deferred Prosecution Agreement Cr. No. 16-516, September 29, 2016. Tom Wilson, Franz Wild and Jesse Riseborough, Congo Backs Billionaire Gertler After Och-Ziff Allegations, October 4, 2016.

[v] Glencore, Updated Statement by Glencore and Katanga to the International Consortium of Investigative Journalists, October 27, 2017 [Hereinafter “Glencore Response ICIJ 2017”], available at

[vi] See Convention de Joint-Venture entre la Générale des Carrières et des Mines et Global Enterprises Corporate Ltd telle que modifiée par l’accord intervenu entre parties signé à Lubumbashi le 13 décembre 2004 relative à l’exploitation de la mine à ciel ouvert de KOV et des gisements de Kananga et de Tilwezembe [Hereinafter “Original DCP Contract 2004”].

[vii] See e.g. Réseau de Lutte contre la Corruption et la Fraude, Bradage Criminel du Patrimoine Minier du Congo, Cas des Partenariats Kinross-Forrest et GEC avec la Gécamines, January 2005, 7 (Hereinafter ‘RELCOF Bradage Patrimoine Minier 2005’]; Rights and Accountability in Development (RAID), Key Mining Contracts in Katanga–The Economic Argument for Renegotiation, April 2007.

[viii] See, generally, Ministry of Mines of the Democratic Republic of Congo, Termes de Reference pour la Renégotiation et/ou la Resiliation des Contrats Miniers [Terms of Reference for Renegotiation], August 2008.









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