“Sanctioned Israeli Billionaire to Gain From Elon Musk Cobalt Deal”
…Tesla Inc…struck a deal last month with Glencore Plc to buy as much as 6,000 tons of cobalt annually for use in the rechargeable batteries that power its electric vehicles. Glencore, in turn, is obligated to pay Gertler about 2.5% of sales from its mines in the Democratic Republic of Congo…What makes the arrangement eye-catching is that Gertler has been blacklisted from the U.S. financial system since December 2017…
Tesla has said it aims to eliminate cobalt from its batteries to reduce costs. That would also remove reputational hazards associated with sourcing minerals from Congo, including human rights challenges posed by artisanal mining…the contract signals that the metal remains key to Tesla’s expansion over the next few years, even at the price of exposing itself to another risk in the central African nation: corruption…
U.S. companies are barred from doing business with sanctioned entities, such as…the Gertler company that receives royalties from Glencore’s mines in Congo. But Tesla’s contract is with Glencore, which is based in Switzerland. Sanctions experts offered differing views of the legal risk for a company in Tesla’s situation…
Of Glencore’s Congolese assets, only one, Kamoto Copper Co., is currently operating. On track to become the world’s largest cobalt mine, it will be the source of most of the metal Tesla buys…At the average price over the past year, it would cost Tesla about $191 million to buy 6,000 tons of cobalt, putting Gertler’s annual royalties from the contract at between $4 million and $5 million.
Source:-Business and Human Rights Resource Center
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