Glencore hopes currency deal will avert risk of US sanctions

GLENCORE has averted legal action that could have resulted in the seizure of two major mines by agreeing to pay a former partner in euros, not dollars, to avoid breaking US sanctions.

The FTSE 100 company will resume royalty payments to Dan Gertler, an Israeli businessman active in the Democratic Republic of Congo, who was placed under US sanctions last year, but it will pay his holding companies in non-us currency.

In return Mr Gertler will drop a $3bn (£2.3bn) claim for lost royalties he was pursuing through UK courts.

Glencore said it had “carefully considered its legal and commercial options” and thought that this outcome would “appropriately address all applicable sanctions obligations”. A spokesman added that it had “discussed the matter with the appropriate US and Swiss authorities”. The payments to Mr Gertler will total around €10m per quarter, starting in July.

Mr Gertler, who has close ties to the DRC’S president, Joseph Kabila, owned a stake in two of Glencore’s copper mines before he was bought out in 2017. He retained a slice of the operations’ royalties, having bought them from the state-backed miner Gecamines.

Glencore continued to pay him monthly royalties until he was placed under sanctions by the US in December. The US Treasury has accused him of amassing his fortune through “opaque and corrupt mining and oil deals” in the DRC. Mr Gertler has always denied wrongdoing.

In April Mr Gertler hit Glencore with his compensation claim and courts in the DRC put a freeze on its DRC mines – although they continued to operate.

Glencore has had teams of lawyers working around the clock to find a way to settle its obligations to Mr Gertler. The US can impose swingeing “secondary sanctions” on companies found to be paying individuals on its blacklist; these could hamper Glencore’s ability to do business in US dollars – a potentially crippling blow.

Analysts welcomed the move, which follows an agreement Glencore struck this week to settle a legal dispute with Gecamines over joint ventures.

Peter Jones of campaign group Global-witness said: “Glencore is in a mess of its own making. We have consistently spoken about the risks of partnering with Dan Gertler, but for years Glencore defended that partnership. Getting around sanctions and paying Gertler millions for years on end is not an acceptable solution to this dispute. US authorities must hold Glencore accountable when those payments to Gertler resume.”

Glencore shares closed down 4.3pc at 381.3p. A spokesman for Mr Gertler declined to comment.