Ivanhoe Mines Connected to Congo Official in Copper Corruption Scandal

Ivanhoe Mines Ltd. has acknowledged a professional connection with a presidential aide who was apprehended in a scandal in the Democratic Republic of Congo, where the company has a major stake in one of the world's largest copper reserves.

Last year, Ivanhoe made an agreement with Vidiye Tshimanga, a close advisor to Congo's President Felix Tshisekedi, as stated in a Dec. 14 statement. In September, he was taken into custody after a series of videos that were recorded in secret seemed to demonstrate him offering political protection for an undisclosed mining agreement in return for a share in the project.

In the videos, Tshimanga claimed he had a similar agreement with Ivanhoe. Tshimanga is currently facing a trial in Congo for passive corruption and influence peddling. On Dec. 15, he told Bloomberg he would answer Ivanhoe's statement, but has yet to do so.

At the beginning of 2021, Ivanhoe Mines entered into a term sheet with a Congolese entity owned by Mr. Vidiye Tshimanga for a joint venture on certain exploration licenses, as reported by Bloomberg in an email. However, the agreement is now in arbitration at the International Chamber of Commerce in Paris due to Tshimanga's company not adhering to the commercial terms of the agreement, according to Ivanhoe.

Term sheets are documents that provide a summary of the key points of a potential transaction, but they are not legally binding.

The Democratic Republic of Congo is home to some of the world's most abundant mineral resources, and could be a major contributor to the global energy transition with its copper and cobalt reserves. Unfortunately, the development of the nation's mining sector has been hindered by corruption issues. However, Ivanhoe has been a leader in the recent influx of investment into the country.

Ivanhoe has a significant stake in the Kamoa-Kakula copper project located in southeastern Congo, with a 40% ownership, which is the same size as China's Zijin Mining Group. According to Ivanhoe, this will make them the second-largest copper project in the world.

Crystal River Global Ltd., a Chinese investment company, owns 0.8% of Ivanhoe's assets, while the Congolese government holds the remaining 20%. Ivanhoe has obtained multiple exploration permits in the copperbelt of Congo, as well as the Kipushi zinc mine.

The Democratic Republic of the Congo is the third-largest producer of copper in the world and the primary source of cobalt, a mineral essential for batteries.

Tshimanga made a statement in the videos obtained and released by the Organized Crime and Corruption Reporting Project on September 15th, saying "Ivanhoe has 80 and I have 20". It was unclear what he was referring to.

Congo Bantu Mining Sarl (Cobamin), owned by Tshimanga, has three exploration permits that are adjacent to several concessions owned by Vancouver-based Ivanhoe in the southeastern region of the Democratic Republic of the Congo, as indicated on the country's mining registry map.

On December 15th, The Sentry, an organization based in Washington that works to combat corruption, released a report claiming that Ivanhoe had been given preferential treatment by involving politically connected people in their dealings in the Congo.

On the same date, Ivanhoe's stock experienced a sharp decrease of up to 12%, the most significant intraday drop since June. This was in response to a report from the Globe and Mail that Canadian police had conducted a search of the company's offices in the past year for information regarding bank transfers related to its mining activities in Congo.

The organization had previously revealed the investigation of its Vancouver locations and declared in an independent proclamation on Monday that no indictments had been presented in the matter.

The Ivanhoe statement indicated that the search warrant was connected to Stucky Ltd., which is now a subsidiary of Gruner AG, Stucky Technologies, and the Congolese state-owned power company, SNEL.

The Sentry report outlines payments made to Stucky Technologies, however, it is uncertain if this company is connected to Stucky Ltd. or Gruner, based in Basel, Switzerland. Bloomberg sent emails to Gruner on Monday, but they did not respond.

A representative from Ivanhoe stated to Bloomberg that they had revealed as much information as they were instructed to regarding the investigation and the people involved.

Ivanhoe noted that the Sentry report and the Globe and Mail article contain a lot of inaccurate information that is presented in a way that casts Ivanhoe Mines in a negative light. This has had a detrimental effect on the company's business and the reputation of other Canadian companies that operate abroad.

Ivanhoe stated that they operate in accordance with both Congolese and global regulations.