Glencore Share Discussion Threads

[leoneobull] 16/6/2018 06:32

When the U.S. imposes sanctions on an individual, western multinationals are quick to fall into line. So if a London-listed company decides that – on reflection – they'll circumvent the ban by paying the person using a different currency, you can bet there's something interesting going on behind the scenes.The question is: What?Glencore Plc's announcement on Friday that its Democratic Republic of the Congo mining subsidiaries will restart royalty payments to Israeli billionaire Dan Gertler is eyebrow-raising to say the least. The U.S. imposed blocking sanctions on Gertler in December, following allegations of corruption related to the sale of DRC mining assets. He has denied any wrongdoing.Glencore worked with Gertler for years to tap into Congo's vast mining resources, but has since cut ties. In the wake of the sanctions designation, it decided it couldn't honor its remaining contractual obligations to make payments to Gertler-affiliated entities.Now, Glencore says its subsidiaries will pay Gertler what he's owed, only the funds will be transferred in euros and U.S. citizens won't be involved. Analysts at Goldman Sachs Group Inc. estimate that the payments are worth about $130 million annually (when translated back into dollars, of course.)The commodities giant can afford decent legal advice. Still, it must have received some pretty copper-bottomed assurances from the U.S. that it won't be punished for dealing with Gertler – as far as it's possible to get such a guarantee these days. Glencore acknowledges consulting the U.S., but is tight-lipped about what was said.So why would the U.S. give the company the green light? My guess is that there's something akin to the Great Game going on here, with the West and China jockeying for influence over mineral resources that will define the 21st century economy. And Glencore has found itself somewhere in the middle of it all.Congo is home to about half the world's cobalt reserves as well as plenty of copper, and both are key ingredients of electric car batteries. In the age of Tesla, it just might be the new Saudi Arabia, analysts say

[leoneobull] 15/6/2018 22:48

https://www.bloomberg.com/view/articles/2018-06-15/glencore-s-billionaire-move-is-part-of-great-gameVery interesting on Glen sanction busting

[raffles the gentleman thug] 15/6/2018 20:57

Yup and the US won't even raise $10bn of incremental revenues from these tariffs yet the mining sector alone today lost more than this - let alone the value lost right across European markets - pathetic

[leoneobull] 15/6/2018 20:52

Do you think the largest mining and commodities trading giant in the world didn't get their lawyers to consult the US first?The share price was up most of the day. Just trade war and weakness in copper. Dow back up

[waldron] 15/6/2018 17:26

YEP THATS THE PROBLEMO

NEXT WEEK A GREAT PIVOT WEEK FOR ONE AND ALL

[montyhedge] 15/6/2018 17:18

Yes agree, but do you want to possibly upset the US over a sanctioned person.

[waldron] 15/6/2018 17:03

BLOOMBERG DISCUSSED THE SITUATION A MOMENT AGO

MENTIONED ALSO ABOUT A POSSIBLE UK COURT CASE REGARDING BRIBERY

ALL VERY DELICATE STUFF

IF CONGO ASSETS PROTECTED THEN A POSSIBLE UPWARD TREND MIGHT BE SEEN NEXT WEEK

[montyhedge] 15/6/2018 16:54

Is this the reason for the fall?, I think they are taking a chance.

[waldron] 15/6/2018 15:51

A GENERAL MARKET SELL OFF SOMEWHAT TYPICAL AT END OF WEEK AFFECTING NOT JUST OUR GLEN

ALTHOUGH OTHERS NOT HIT AS HARD

FTSE 100
7,665.73 -1.29%

[a2584728] 15/6/2018 15:44

Ridiculous drop

[a2584728] 15/6/2018 14:12

All bluster will bounce soon enough

[book5] 15/6/2018 13:48

Weaker activity than expected in China

Trade war escalation

Market need China to cut reserves lenders must hold

Bearish short term?

Bullish log term

Ongoing Escondida negotiations is other factor for copper price,

[leoneobull] 15/6/2018 10:33

Probably sbdy has taken the price down acquired a load to flog to the yanks once dow open.

[the grumpy old men] 15/6/2018 09:43

Net Tangible Asset Value PS * 220.54 p
Net Asset Value PS 253.84 p

Can anyone confirm latest nav and ntav

cheers

[the grumpy old men] 15/6/2018 09:41

Josh White
WebFG News
15 Jun, 2018 09:18 15 Jun, 2018 09:18
Glencore to make non-dollar payments to avoid asset seizures in DRC
glencore
Glencore
397.00
09:25:47 15/06/18
-0.38%
-1.50
FTSE 100
7,748.68
09:25:48 15/06/18
-0.22%
-17.11
FTSE 350
4,322.65
09:25:49 15/06/18
-0.26%
-11.39
FTSE All-Share
4,268.22
09:25:48 15/06/18
-0.24%
-10.48

Glencore, along with Katanga Mining, said on Friday that it has determined that its “only viable option” to avoid the material risk of seizure of its assets under Democratic Republic of the Congo court orders would be for its subsidiaries Mutanda and KCC to pay relevant royalties as and when they become due to Ventora in non-US dollars, without involving US persons, in order to discharge their obligations under the terms of the pre-existing contracts.

The FTSE 100 firm said Mutanda, KCC, Ventora and AHIL had on that basis agreed to withdraw all pending and threatened litigation between them pursuant to a settlement agreement signed by the parties.

On 27 April, Glencore reported freezing orders filed against Mutanda Mining and Kamoto Copper Company (KCC) by Ventora Development, a company affiliated with Dan Gertler.

Glencore said it had “carefully considered” its legal and commercial options in connection with its dispute with Ventora and Africa Horizons Investments Limited (AHIL), also a company affiliated with Gertler, and its obligations to its various stakeholders, including its shareholders, customers and the communities in which it operates in the DRC.

“Glencore believes that payment in non-US dollars of royalties and access premiums to Ventora without the involvement of US persons would appropriately address all applicable sanctions obligations,” its board said in its statement.

The company described itself as a “substantial investor and partner” in the country, adding that it was committed to sustainable mining, creating employment and supporting local businesses, providing substantial revenues to local and national government and making voluntary contributions to improve living standards in the communities in which it operates.

“On 27 April 2018, Ventora served freezing orders in the DRC against Mutanda and KCC for approximately $695m and $2.28bn, respectively,” Glencore explained.

It said Ventora had alleged that Mutanda breached an agreement with it pursuant to which Mutanda was required to make royalty payments to Ventora.

Ventora asserted that if its claim was upheld, it would be entitled to damages of approximately $695m, which it alleged was the value of the future royalties due to it under the agreement.

“Ventora alleged that KCC had breached an agreement between KCC, La Générale des Carrières et des Mines (Gécamines) and AHIL pursuant to which it alleged KCC was required to make royalty payments to Ventora,” the company further explained.

“Ventora asserted that if its claim was upheld it would be entitled to damages of approximately $2.29bn, which it alleged was the value of the future royalties due to it under the agreement.”

On 28 April, Ventora obtained from the Kolwezi High Court injunctions to pay against KCC and Mutanda in the amount of $2.86bn - an increase of $572m for alleged legal fees - and $869 million - an increase of $174m for alleged legal fees - respectively, which, if they had become final would have potentially enabled Ventora to permanently seize assets at the Mutanda and KCC mines up the to the amounts of these injunctions.

“These assets seizures would have severely disrupted the mines and would have enabled Ventora to seize all productive assets at the mines, including mining titles.”

In December last year, the United States government designated Dan Gertler and affiliated companies as ‘specially designated nationals’ (SDNs), thereby imposing blocking sanctions on them and companies, such as Ventora and AHIL, owned 50% or more by them.

KCC and Mutanda are party to agreements with Ventora and AHIL which were concluded prior to the designation of Gertler as a SDN when the Gertler-affiliated entities acquired these rights from Gécamines.

“The agreement between Mutanda and Ventora provides for royalties to be calculated at a rate of 2.43% of ‘gross sales’ from the Mutanda mine.”

Glencore said the royalties were payable quarterly, and it estimated that the amount payable by Mutanda would be approximately €10.5m per quarter beginning in July.

“The access premium payments are payable based on the number of tonnes of commercially exploitable reserves at a rate of €24 per ton.

“The access premium payment is subject to a cap of €10,464,379 per year, but no payment is due until 2019 in which event the access premium payment will be capped at €2,685,508.221;

Glencore said Mutanda would make a true-up royalty payment to Ventora on the date of the settlement agreement in the amount of approximately €4.6m.

It said the agreement between KCC and AHIL provided for the royalties to be calculated at a rate of 2.5% of ‘net sales’ from the KCC mine, subject to certain deductions, also payable quarterly.

Glencore estimated that the royalties for 2018 would be around €10m per quarter, and then for 2019 approximately €16.5m per quarter.

“KCC made a pre-payment to AHIL in 2015 and there is a balance of approximately €44m outstanding under the prepayment against which current royalties are being off-set,” it explained.

“It is therefore expected that the next royalty payment from KCC will be in 2019.”

AHIL had assigned its right to receive royalties to Ventora, such that Ventora would be the recipient of royalties at both Mutanda and KCC with immediate effect.

The amounts set out had been converted to euros based on prevailing exchange rates, but the final amounts payable in euros would be determined based on the exchanges rates prevailing at the time of payment, Glencore confirmed.

[gutterhead] 15/6/2018 09:18

MM's having a field day with this

[a2584728] 15/6/2018 09:16

Strange price action

[wisteria2] 15/6/2018 08:08

Could be the catalyst for a sustained rise above £4 ....gla holders

[a2584728] 15/6/2018 08:07

What a great investment this company is. Started at 278 and now have a sizeable holding that I sit on and trade a few on the dips

[a2584728] 15/6/2018 07:05

Should fly through 400p today

[arja] 14/6/2018 15:16

leoneobull
$US strong means a weak copper price at times as has happened this time

[foxy22] 14/6/2018 14:46

Draghi ecb effect...this retypes