U.S. Considers Dropping Sanctions Against Israeli Billionaire in Push for EV Metals
Plan would let Dan Gertler participate in mining deals with Saudi Arabia; American companies would get some of the metals
As part of its quest to gain access to minerals critical to the energy transition, the U.S. has recently considered a plan to drop sanctions against an Israeli mining magnate accused of corruption, according to people familiar with the matter.
The plan involves the U.S. lifting sanctions on businessman Dan Gertler, whom it accused nearly six years ago of corruption, to allow him to take part in mining deals with Saudi Arabia, the people said.
Those mines, in turn, would ultimately deliver metals to American companies, the people said. Saudi Arabia, the U.S. and Gertler have held early-stage talks about potential deals that could benefit all three parties, they added.
The talks were active as recently as earlier this month. It isn’t clear what effect, if any, the Hamas-Israel war might have on the discussions.
Under one multibillion-dollar proposal that was being discussed, the Saudis would buy stakes in cobalt and copper mines in the Democratic Republic of Congo that are currently paying royalties to Gertler. The U.S. would get some of the rights to production from those mines.
Because Gertler is sanctioned by the Treasury Department and barred from doing business that has a U.S. nexus, the government is working on ways to remove him, the people said. A deal isn’t guaranteed, and the talks could fall apart, the people cautioned.
Gertler, a longtime diamond merchant who made a fortune in Africa and has for more than a decade been controversial there, has ramped up efforts to get removed from the sanctions list in recent years.
The Treasury Department sanctioned Gertler in 2017, accusing him of amassing his fortune through opaque and corrupt mining and oil deals in Congo through connections with former Congolese President Joseph Kabila. It imposed further sanctions on entities affiliated with him in 2018, accusing Gertler of using his close friendship with Kabila to act as a middleman for mining asset sales in the country.
Gertler has repeatedly denied wrongdoing.
Lobbying disclosures from 2019 show that Gertler engaged former Federal Bureau of Investigation director Louis Freeh and lawyer Alan Dershowitz, among others, in his efforts to lift the sanctions. They argued to the Treasury Department that the sanctions were meant to be remedial, not punitive, according to people familiar with the discussions.
The efforts proved partially successful. In the last days of the Trump administration in January 2021, the Treasury Department provided Gertler a one-year license allowing access to financial institutions and blocked funds as long as he submitted reports about his activities.
In March 2021, after President Biden took office, the Treasury Department revoked the license. The government said the license was “inconsistent with America’s strong foreign policy interests” in combating corruption, including in Congo.
The following year, Gertler and Congo came to an agreement under which he agreed to give back to the government oil permits and mining rights that were reported to be worth around $2 billion. As part of the deal, the country agreed to help petition the U.S. to rescind the sanctions.
Congolese and international organizations have urged the U.S. government to maintain sanctions against Gertler. In March, groups including Human Rights Watch and Freedom House wrote to Secretary of State Antony Blinken and Treasury Secretary Janet Yellen asking them not to lift the sanctions, saying Gertler hadn’t met the necessary conditions.
In a February letter to a U.K.-based nongovernmental organization, Gertler said though he didn’t believe he should have been sanctioned, he had ended his activities in Congo and transferred significant assets. He said he believes his initial investments in the country “built critical infrastructure, created employment, and catalyzed development of the natural resource sector.”
Justyna Gudzowska, senior policy adviser to the Sentry, a watchdog group co-founded by actor George Clooney, said it was surprising that the U.S. would consider allowing Gertler to collect revenue streams stemming from the activities that got him sanctioned in the first place. Gertler “should have to relinquish any interest in those streams before sanctions relief is even contemplated,” she said.
The U.S. and Saudi Arabia have been discussing plans such as a state-backed Saudi venture to buy stakes in mining assets in African countries, from which the U.S. would buy metals and minerals, The Wall Street Journal earlier reported, as it tries to shore up its supply chains.
Saudi Arabia is looking both at buying stakes in or the entire copper-cobalt projects, some of the people said, in deals that could be worth around $2 billion. Some of the projects in Congo that the Saudis are looking at include those owned by Swiss mining and trading giant Glencore and Eurasian Resources Group, a Kazakh-backed mining company, the people said. A spokesperson for ERG said it is often approached by various investors but that it doesn’t intend to sell its Congolese assets. A spokesperson for Glencore declined to comment.
Cobalt and copper are key components of the so-called clean economy. Used for electric vehicles and wind farms, copper is in hot demand by governments and companies the world over.
Chinese companies refine three-quarters of the world’s cobalt supply and produce about 70% of the world’s lithium-ion batteries, raising concerns in the West about reliance on Beijing.
The mining discussions are part of broader talks between the U.S. and Saudi Arabia on investing in global infrastructure projects in developing countries, some of the people said. The White House last month announced an intercontinental economic corridor linking India to Europe through Saudi Arabia.
Saudi Arabia also said it would commit $20 billion to the Group of Seven infrastructure initiative.
If mining deals do get consummated, it would help ease strained relations since Biden took office and promised to make the Gulf kingdom a “pariah” for its human-rights record. Since Russia’s invasion of Ukraine, the U.S. has been critical of Saudi Arabia’s alignment with Moscow to keep oil prices high and wary of its embrace of China, though Washington-Riyadh relations have begun to thaw, with increasing commercial cooperation.