Glencore (LON:GLEN) has held discussions over the potential sale of a stake in its flagship Kamoto Copper Company (KCC) mine in the Democratic Republic of Congo (DRC), showing a potential change in strategy for the commodities trader that has long considered the project a cornerstone of its African operations. KCC, one of the world’s largest combined copper and cobalt producers, yielded 191,000 tons of copper and 27,000 tons of cobalt in 2024. Despite those figures, the mine has been hindered by operational difficulties, falling cobalt prices, and a protracted dispute with Congolese authorities over billions of dollars in royalties and taxes.

While Glencore has not launched a formal sales process, it has signaled to companies including Rio Tinto Group that it is open to selling a controlling stake, according to people familiar with the matter. The Swiss-based company previously rejected an unsolicited bid from New York-based Orion Resource Partners, which was working in partnership with Abu Dhabi’s ADQ, but sources said recent talks with Orion and others have intensified.

U.S. Strategic Interests

The possible sale of KCC is unfolding against the backdrop of broader negotiations between the United States and the DRC over a minerals and infrastructure partnership. Washington has made access to critical minerals — particularly cobalt, copper, and rare earths — a policy priority amid growing concern about China’s dominant role in the sector.

The U.S. International Development Finance Corp. (DFC) is in talks to establish a mining investment fund with Orion, Bloomberg reported this week. Three people familiar with the matter said the DFC could participate in a potential KCC deal through that partnership. A senior State Department official declined to address the specifics of any sale but emphasized Washington’s commitment to encouraging U.S. investment in Congo and strengthening cooperation with African partners in the critical minerals sector.

Congo is the world’s second-largest copper source and accounts for about 75% of global cobalt production. Glencore remains the only major Western company with substantial cobalt operations in the country, while Chinese firms and Kazakhstan’s Eurasian Resources Group dominate the industry. Overproduction has weighed heavily on cobalt prices, but demand from the defense and energy industries has prompted the U.S. to consider stockpiling supplies as a safeguard.

Glencore’s decision to explore options for KCC also comes at a time when the company faces investor frustration over its performance. KCC has failed to reach its full production potential, while Glencore’s overall copper output has been declining. Compounding the situation, the group has seen its coal revenues fall and has struggled with a crisis in metals processing and refining, contributing to a nearly 20% drop in its share price over the past year. The company holds a 70% stake in KCC. The remainder belongs to Congo’s state-owned Gecamines and the Congolese government.

Royalties Dispute and Sanctions Issues

Another complication in any sale is the royalty arrangement tied to sanctioned Israeli businessman Dan Gertler. Gertler, who has long-standing ties in Congo’s mining sector, is entitled to a 2.5% royalty on KCC’s net revenues, as well as payments from Glencore’s Mutanda mine and ERG’s Metalkol operations. The U.S. Treasury sanctioned him in 2017, alleging he accumulated wealth through opaque and corrupt mining and oil deals, charges Gertler denies. He has never been charged with a crime.

Western investors have been hesitant to commit capital to Congolese projects partly due to the risk of indirectly engaging with a sanctioned individual. Several options are being discussed to resolve the matter, including a lump-sum buyout of Gertler’s royalties, transferring them back to Gecamines, or leaving Glencore with a large enough stake to continue paying the royalties without involving new buyers. Gertler has shown a willingness in principle to divest his Congolese royalties, participate in an audit, and accept a U.S. license that could lift sanctions under certain conditions. The value of his royalties could amount to hundreds of millions of dollars.

Despite ongoing talks, apparently some people close to the negotiations cautioned that there is no guarantee of a deal. The outcome may depend not only on price but also on resolving disputes with the Congolese government and addressing the sanctions-related complications.

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