Glencore’s Kamoto Mine in Congo Involved in €800 Million Royalty Dispute

Glencore’s Kamoto Copper Company in the Democratic Republic of Congo faces a €800 million royalty dispute with local tax authorities, DGRAD. The government claims overdue payments, leading to actions such as freezing bank accounts and temporarily sealing a warehouse. Despite these developments, mining operations remains unaffected, and Kamoto continues to produce significant amounts of copper and cobalt, contributing to the DRC’s position as a top global producer.

The Kamoto Copper Company, operated by Glencore Plc in the Democratic Republic of Congo (DRC), is currently engaged in a dispute with local tax authorities regarding royalty payments. The DRC’s tax body, referred to by its French acronym DGRAD, claims that the company owes over €800 million (approximately $894 million) to the state. Amidst escalating tensions, DGRAD has taken significant measures, including freezing Kamoto’s local bank accounts and briefly sealing one of its warehouses. However, production activities at the mine have not been disrupted during this conflict. Kamoto is one of Congo’s largest copper mines, holding a 75% stake by Glencore. It has reported substantial output figures, exporting 200,000 tons of copper and 16,000 tons of cobalt in 2023 alone. Notably, in the first half of this year, the mine produced 89,000 tons of copper and 11,700 tons of cobalt. Although discussions between Glencore and the tax authorities have not yet yielded a resolution, normal operations resumed after a brief closure of the warehouse. Over the period spanning 2021 to 2023, Kamoto Copper Company has made tax and royalty payments totaling $2.3 billion to the Congolese government. Meanwhile, Congo’s position in the global copper market has strengthened significantly, making it the second-largest producer of copper and the largest source of cobalt.

The dispute between Glencore’s Kamoto Copper Company and the DGRAD stems from a significant amount of alleged unpaid royalties. The DRC has been actively working to increase its revenue from the mining sector amidst rising global demand for copper and cobalt, crucial elements for green technologies and electric vehicles. With a substantial boost in copper exports since 2015, the government aims to leverage its mineral wealth to fuel national development. This has led to stricter enforcement of tax obligations, which directly impacts companies operating within the country, including multinational giants like Glencore.

The ongoing royalty dispute between Glencore’s Kamoto Copper Company and Congolese tax authorities highlights the growing tension between multinational mining entities and local governments over financial obligations. Despite the financial claims and regulatory actions taken by the DGRAD, the production of copper and cobalt at the Kamoto mine has not been interrupted. As the DRC continues to enhance its standing in the global mining industry, the outcome of this dispute may have broader implications for foreign investments and operational policies in the region.

Original Source: financialpost.com