Cobalt Mining: Where Jeff Bezos, Bill Gates, and Michael Bloomberg Are Spending Their Money

Problems quickly emerged. Bateman, a consulting firm owned by one of Gertler’s fellow shareholders, Beny Steinmetz, had conducted the feasibility study prior to the public offering, but after the IPO, it became apparent that “the methodology for doing the costing was not accurate,” Nikanor’s head of funding at the time, Brian Scallan, told Vanity Fair. Lowball projections may have helped entice U.K. investors, but now they meant the company would require hundreds of millions in further funding to get off the ground. The news incensed the J.P. Morgan team, who felt they and their market clients had been hoodwinked. After failed talks with a potential Chinese suitor and as Nikanor’s stock price started sliding, Gertler and Steinmetz sought to take the company private again, with help from Glencore, which increasingly wanted not only to sell metals to a global market but to mine them too. The privatization plan was a highly unusual and controversial move for a recently listed business and prompted more angry recriminations. So, facing stiff resistance from executive chairman Leslie and J.P. Morgan executives, Gertler and his original partners used their controlling shares to instead vote through a $736 million cash injection that left Glencore with a sizable stake and significant control over Nikanor—including the ability to decide its top executives and the right to sell all mined material. Part of that cash included a $297 million Glencore loan to a Gertler-controlled company in the Cayman Islands, which massively expanded Gertler’s share in the business and unpicked the previous efforts of the J.P. Morgan team to downsize his role. Gertler’s increased shareholding wasn’t disclosed until several hours after the sale had gone through (and only then under duress), and Glencore’s loan to Gertler’s company was only incidentally disclosed months later, in a separate firm’s financial filings.

It was the first of more than a dozen transactions between Gertler and the Swiss firm that revolutionized global cobalt production, generating geysers of cash—and collateral damage. Many of the sales, loans, and divestments involved companies incorporated in offshore jurisdictions like the British Virgin Islands, where ownership is unidentifiable. Some had Congolese names—Ruwenzori is a mountain range that borders Uganda. Others, like Ellesmere Global Limited, offered a patina of British-sounding respectability. But what united many of these Gertler-affiliated corporate entities and trades was their utter opacity, making it hard for anyone to learn how his businesses had won access to prized Congolese mines, when exactly they had traded, or where the dollars (or euros or Congolese francs) ultimately ended up. The unwelcome attention that shoddy mining operations have drawn over the years continues to scare major miners and investors away from the country’s mineral riches and is indirectly driving the discovery efforts 6,500 miles away, in Greenland.

Kuupik Kleist was one of the last children born in Qullissat, the result of a Danish craftsman’s union with a local woman. He was adopted by an aunt and uncle, the town’s telegram operator, who punched out a final message to confirm the settlement’s closure on his own way out of town. Like many Greenlanders of his generation, Kleist was dispatched at an impossibly young age to a boarding school hundreds of miles away, where he pursued his education assiduously, all the while internalizing his anger over the unilateral closure of his hometown. He later led Greenland’s negotiations with Denmark over autonomy and in 2009 became the first prime minister of the self-governed nation, at the time publicly welcoming foreign investment at every opportunity. People from Scandinavia had arrived on a Greenland inhabited by Inuits in the mid-13th century, and the impacts of colonialism linger to this day, with the current secondary school syllabus still taught in Danish rather than the native Greenlandic tongue that is used in primary schools. Smaller settlements often lack educational provision for older children, making high school prohibitively expensive. On several domestic flights in Greenland, I sat beside a young teenager returning home from school or visiting a parent in a far-off settlement. A Greenlandic education historian estimates that by the end of colonial rule in 1953, there were just only a “few” college graduates in Greenland, all with Danish degrees. Today, only around one in eight students who enter primary school finishes secondary school.

While formally an autonomous territory, Greenland remains part of the Danmarks Rige, or Danish realm. Its government must still defer to Denmark on matters of defense and foreign affairs, and it relies on Danish taxpayers for roughly half its $600 million annual budget. For some time Greenlandic nationalists have argued the potentially lucrative revenues from mining could help replace that subsidy and strengthen the case for full independence. But Kleist, now retired from politics and working as a consultant to a foreign mining company, disagrees. “It’s not a means to liberate the state of Greenland,” he told me when we met in Nuuk, the fast-growing capital city. “Mining would never kind of pave the way for independence.”

The father of Naaja Nathanielsen, Greenland’s current mining minister, was also born in Qullissat, then sent to Denmark at six when his mother died. “He never went home,” Nathanielsen told me one morning when we met near the parliament building in Nuuk. Greenland has limited experience negotiating with well-funded foreign mining firms, but “being late to the party,” as she puts it, may provide advantages never available to a country like the DRC. “We were very much aware of what has been done around the world—and what has been done wrong around the world,” she said.

In November Nathanielsen spearheaded a ban on uranium extraction that may sink a joint Australian-Chinese mining project focused on rare earth elements. Months earlier, she and her ministerial colleagues had also ended oil and gas exploration because of “severe” risk of a potential spill. The World Wildlife Fund’s project coordinator for Greenland approvingly described the prohibition as a “gutsy” move, particularly given the potential for tax revenues. But Nathanielsen insists it was a no-brainer for a nation with a pristine Arctic environment where fishing provides thousands of jobs and a huge chunk of economic output. She is broadly supportive of the mining sector but plans to update transparency and environmental requirements. Currently, just two small mines operate in the entire country, extracting rubies and preparing to mine anorthosite, a mineral used in manufacturing.

All this might make Trump’s pseudo-imperial fantasy of buying Greenland not sound like such a lark, though that proposal ultimately ended up as a $12 million economic grant to encourage mining cooperation. At Greenland’s only mining school, where students learn to dynamite rocks and build pit roads, the director has developed a million-dollar partnership with U.S. counterparts to help construct a training facility for an underground mine—the kind that might be built on Disko. Well before that, though, Bluejay will need to sign an “impact benefit agreement” with the local community that could include employment guarantees. And given that any mine would be dozens of miles from the nearest residents with no roads in sight, as one Greenlandic investment expert speculated, “without foreign labor you will not be able to run projects like this.”

Toone, the technical lead at Breakthrough Energy Ventures’ investment committee, says the hardest—and fastest—race will be to complete the global energy transition before it’s too late. “The electrification of transportation is something that absolutely has to happen if we’re to make a significant impact on the production of greenhouse gases,” he says, while virtually all batteries used toward that effort today still require cobalt mined in the DRC under “conditions that I don’t think any of us would be comfortable with.” Within the next few years, if enough new deposits have been discovered elsewhere—in Greenland, or Australia, or maybe Canada—it still will not solve that problem fast enough. But the desire to make money may ultimately be the only solution available. As Toone says, “The kind of capital that’s necessary to do what we want to do here is going to come from investors who are seeking to earn a return.”

While I was reporting this story, Glencore invited me to see KOV firsthand. It is currently the world’s largest source of cobalt and is still a cash tap for Gertler, with Glencore’s KOV-anchored complex netting him $20,000 every hour or so in mining royalties. The vast canyon of minerals stretches more than a mile across and more than 1,000 feet deep. A geological kaleidoscope of oxidation fans out from beneath an observation deck on its northeastern flank; flaming red and bright lilac tinged with dark green. My December visit followed torrential rain, and black pipes as thick as culverts snaked into multimillion-dollar pumping stations to combat the streams of water. Every hour in the dry season, hulking shovel machines dump 3,000 tons of earth into enormous trucks that trundle up sloped roads cut into the mine’s walls; radar dishes scan for any concerning movement. Several years ago, seven workers died in a wall collapse. In 2019, more than 40 local creuseurs—French for “diggers”—died when a section of KOV they were excavating without the mine operator’s permission collapsed. Of the 9,000 staff and contractors Glencore employs around Kolwezi, some 1,200 now work in security, and the company has clearly made and continues to make significant efforts to stop similar intrusions.

Just outside Glencore’s concession, now largely ringed by 24 miles of concrete blast walls like the ones that surrounded U.S. military installations in Iraq and Afghanistan, an enthusiastic team of Congolese community liaisons greeted me and took me on a tour of a clean but empty new maternity clinic in Kamoto, a village that abuts the pits. Departing the clinic, we passed clusters of workers scavenging chunks of ore from a small pond at the village edge.

The trucks from KOV dump their loads near the pit’s edge, where miles of conveyor belts carry the material to a complex that transforms it into sheets of copper metal or powdery blue-green cobalt hydroxide, which is then poured into vast piles of 1,300-pound white canvas bags and trucked to East African ports, destined for yet more processing, primarily in China. Rusting freight train carriages lie in piles beside the rutted road, on land still controlled by Gécamines, the Congolese state-owned mining company that is a nonoperational partner in most of the company’s larger mines. Clint Donkin, Glencore’s top copper executive in Africa, explains how complex it has proven to be to run a professionalized operation here. “The concession is spread out over a large area,” he says, and “in amongst it is the infrastructure from the original workings.”

He was referring to various plots of land and aging facilities that separate Glencore’s underground mine from the vast pits and the refinery, which uses a chain of processes, including towering crushers, mills, and concentration systems, to convert ore into shining squares of copper and mountains of cobalt hydroxide. Back in 2006, the refining and concentrating facilities Donkin showed me were the only ones in the area but belonged to a Canadian competitor of Nikanor called Katanga. Its CEO, Arthur “Art” Ditto, was not initially interested in pooling resources with Nikanor, but over time the capital-intensive nature of restarting a mine depleted Katanga’s funds, just as credit markets tightened ahead of the 2008 financial crisis.

What came next was almost a transactional replica of how Gertler had gained control of Nikanor: His offshore firms grew his stake in Katanga; Glencore kicked in $265 million in loans to Katanga while also loaning money to Gertler’s companies, again undisclosed at the time. Within two years, all the original partners and competitors saw their shares diluted to the point of irrelevance. “I couldn’t trust Dan further than I could throw him,” said Eric Lilford, a former Nikanor board member Beny Steinmetz had brought in who resigned when the merger was announced, for “personal reasons,” calling Gertler “as crooked as they come.” Ditto, who resigned as Katanga’s CEO soon after the merger, said Gertler and Glencore executives had operated “like they were in the Wild West,” avoiding disclosure to mask their long-held ambition to combine the various mining assets. These were guys, he told me by phone from his retirement home in Arizona, “who play the game under different rules, a different way, in a way that I wouldn’t, I couldn’t.” Nikanor had burned through cash as well, though, and “would have been an abject failure for J.P. Morgan and the people who put money in” without the merger, one mining executive told me, “because it was no chance of ever being mined.” (The DRC’s mining minister, whose department had once chosen to separate the two projects, welcomed the “milestone” transaction.)