Israeli mining tycoon Dan Gertler on the U.S. blacklist will benefit from Tesla’s Cobalt deal
Tesla signed a deal last month to buy 6,000 tons of cobalt from Glencore, which is obligated to pay Gertler 2.5 percent of all its revenues from Congo’s mines.
Tesla last month signed an agreement to purchase 6,000 tons of cobalt from Glencore led by CEO Ivan Glasenberg.
Cobalt is a chemical element recognized as an important enabling metal where energy storage, high-temperature resilience, hardness, and process efficiency are required. Tesla intended for batteries that can be charged in the company’s cars. But, like nickel, cobalt, is found in the Earth’s crust only. Glencore buys cobalt from the mines in the Congo from Israeli tycoon Dan Gertler, whom the U.S. has banned financial dealings with.
According to Bloomberg, Glencore is obligated to pay Gertler 2.5% of all its revenues in the mines in the Democratic Republic of Congo – a right he acquired from the state-owned mining company Gecamines.
According to sources who spoke with Bloomberg, the material that Tesla acquires will come mostly from the mines in the Congo, so the agreement will indirectly bring Gertler several million dollars a year.
Gertler has been blacklisted by the U.S., and as of December 2017 is unable to operate in the U.S. financial system and is now expected to post an indirect profit from payments made by a U.S. company.
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Ivan Glasenberg,Dan-Gertler
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L-R Ivan-Glasenberg, Dan Gertler Glencore Plc, lead by Ivan Glasenberg, agreed to pay the Israeli billionaire Dan Gertler $960 million for his remaining stakes in Congolese cobalt and copper mines. 31% More…
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U.S. sanctions were imposed on Gertler, among other things, for allegedly using U.S. law enforcement in his friendships with former President Joseph Kabila to obtain concessions in Congo through a series of corrupt deals. Gertler denied the allegations.
Tesla itself has previously announced that it intends to work to remove cobalt from its batteries, in order to reduce costs. Tesla also knows full well that such a move would remove the ethical problem associated with the mines in the Congo – according to reports in these mines human rights violations were committed and children were illegally employed.
At the same time, the agreement with Glencore indicates that Tesla is still far from giving up cobalt. The material itself is very dangerous and Glencore has pledged to all the purchasers who signed an agreement with it that the mining is mechanical and without human hand contact.
“Buying cobalt from Glencore’s Congo mines not only raises ethical issues, but it also creates legal risks for American companies like Tesla, as some of the money paid goes to the entity under sanctions,” Elisabeth Caesens, senior director of Resource Matters, told Bloomberg. Cassens has specialized in the Congo mining business for more than a decade.
Glencore and Gertler declined to comment on Bloomberg’s request. Tesla did not respond to questions. A U.S. Treasury Department spokesman said he did not intend to discuss Tesla’s contract beyond that he “strongly encourages” U.S. companies to understand the understandable risks involved in requiring compliance with sanctions.
Read more about: Congo mines, Dan Gertler, Glencore, Ivan Glasenberg
