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Ivanhoe Mines Ltd. confirmed a business relationship with a presidential aide who was arrested in a corruption case in Democratic Republic of Congo, where the firm controls one of the world’s biggest copper deposits.
Ivanhoe struck a deal last year with Vidiye Tshimanga, a top aide to Congo’s President Felix Tshisekedi, the firm said in a statement on Dec. 14. He was arrested in September after a series of secretly-taped videos appeared to show him offering political protection for an unnamed mining deal in exchange for a stake in the venture.
In the videos, Tshimanga alleged he’d made a similar deal with Ivanhoe. Tshimanga, who is currently on trial in Congo for passive corruption and influence peddling, told Bloomberg in a message on Dec. 15 he would respond to Ivanhoe’s statement but has yet to do so.
“In early 2021, Ivanhoe Mines entered a term sheet with a Congolese entity beneficially owned by Mr. Vidiye Tshimanga for a joint venture on certain exploration licenses,” Ivanhoe told Bloomberg in an email. The deal is currently in arbitration at the International Chamber of Commerce in Paris after Tshimanga’s company “reneged on the commercial terms of this agreement,” Ivanhoe said.
Term sheets are usually non-binding agreements that outline the terms of a transaction.
Congo has some of world’s richest mineral reserves, and the country could play a critical role in alleviating long-term shortages of metals like copper and cobalt, which will be crucial in the global energy transition. Development of the nation’s mining sector has long been stymied by concerns about corruption, but Ivanhoe has helped to spearhead a wave of new investment into the country in recent years.
Ivanhoe holds almost 40% of Kamoa-Kakula copper project in southeastern Congo, the same-size stake as China’s Zijin Mining Group. Ivanhoe says it will become the second-largest copper project in the world.
Chinese investment company Crystal River Global Ltd. holds 0.8% and Congo’s government controls the remaining 20%. Ivanhoe also has multiple exploration permits in Congo’s copperbelt and the Kipushi zinc mine.
Congo is world’s third-largest producer of copper and the top source of key battery mineral cobalt.
“With Ivanhoe, Ivanhoe have 80, I have 20,” Tshimanga said in the videos, which were obtained and published Sept. 15 by the Organized Crime and Corruption Reporting Project. It wasn’t clear what he was referring to.
Tshimanga’s company, Congo Bantu Mining Sarl, or Cobamin, has three exploration permits that adjoin several concessions owned by Vancouver-based Ivanhoe in southeastern Congo, according to the country’s mining registry map.
On Tuesday, Ivanhoe said the term sheet “envisaged an earn-in” for Cobamin’s permits.
“These final agreements were never signed, considering that Cobamin kept on renegotiating the terms initially set out in the term sheet,” Ivanhoe told Bloomberg by email Tuesday. “No payment was made to Cobamin under this proposed agreement.”
On Dec. 15, Washington-based anti-corruption group The Sentry published a report alleging Ivanhoe had received special treatment by cutting politically connected individuals into deals in Congo.
Ivanhoe’s stock plunged as much as 12% on the same date, its biggest intraday decline since June, after the Globe and Mail reported Canadian police searched the company’s offices last year for information on bank transfers relating to its mining operations in Congo.
The company said the search had nothing to do with its mining operations and was about an electricity project not owned by Ivanhoe. It had previously disclosed the search of its Vancouver offices and it said in a separate statement Monday that no charges had been filed in the case.
The search warrant relates to Stucky Ltd., which is now part of Gruner AG, and Stucky Technologies, and Congo’s state-owned power company, SNEL, according to the Ivanhoe statement.
The Sentry report describes payments made to Stucky Technologies. It is not clear if Stucky Technologies is related to Stucky Ltd. or Basel-based Gruner, which did not respond to emailed questions from Bloomberg Monday.
An Ivanhoe spokesman told Bloomberg that the company had “disclosed as much as we have been advised to about that situation given the state of the ongoing investigation and parties involved.”
“Both the Sentry report and the Globe and Mail article are rife with misleading content that selectively discloses supposed facts,” Ivanhoe said. “This tactic has the effect of impugning Ivanhoe Mines’ reputation, adversely impacting its business and negatively impacting public Canadian corporations operating internationally.”
Ivanhoe conducts its business in line with Congolese and international laws, it said.
Ivanhoe’s arbitration with Cobamin is expected to take place in the first quarter of 2023, it said Tuesday. The company will need to decide whether to confirm its request for implementation of the term sheet, convert it into a request for damages, or drop the arbitration, Ivanhoe said.
(By Michael J. Kavanagh, with assistance from Mark Burton and Thomas Biesheuvel)
Related: Ivanhoe Mines hits back at Sentry, Globe and Mail reports on police search of Vancouver office
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