Today, Bloomberg published yet another in a series of excellent reports on dubious mining deals in the Congo. According to the head of state-owned mining company Sodimico, the government recently sold its shares in two copper projects formerly owned by First Quantum. This is part of a series of sales in recent months and, according to insiders in the mining community in the Congo, it may also be linked to Dan Gertler, the Israeli businessman who recently purchased shares in two other mining concessions from the government.
The novelty – and the scandal – about this most recent deal is that we know how undervalued it was. According to the Bloomberg report, Sodimico sold its 30 percent stake in Frontier and Lonshi for only $30 million, less than one sixteenth of its actual price of around $480 million.
As a reminder, the shares that were sold earlier this year in Mutanda and Kansuki Mining to Dan Gertler were valued at $800 million. While there has been no official publication stating how much the government received in those cases, sources in the state mining company suggested that it may have been around as little as a seventh of the market price.
This comes in addition to other large mining deals concluded over the past year, including the sale by Dan Gertler of the Kolwezi tailing copper project to the Kazakh ENRC conglomerate for $175 million in August 2010.
Gertler was one of the businessmen who is said to have helped finance Kabila’s 2006 election campaign, and he is still considered to be a close ally of the president.
If it is true that this latest sale is also linked to Gertler, his business holdings and assets will have expanded dramatically since 2005, when he founded Nikanor, a large copper mining company that was floated on the London AIM stock exchange for $1,5 billion in 2006. Gertler first became involved in the Congo in 2000, when he obtained the monopoly for diamond purchases from Laurent Kabila.