Orion Glencore Partnership in the DRC

Our next session brings we're down to our final two sessions of the day. Our next session brings us into the mechanics of how these partnerships work in practice. We'll look at the partnership between Glen Core and Orion Resource Partners, the role of DFC Capital in helping advance the strategic transaction in the DRC. It is a compelling narrative of how private capital, public finance, and experienced operators can come together to move strategically important transactions forward. It's the kind of model we've been discussing throughout the day using public tools to mobilize private capital and d-risk investment. to discuss this partnership and how we can how it came together. I'm delighted to welcome um Seth Levy, head of US corporate affairs at Glenor, Harry Barker, cobalt trader at Glen Core, and Michael from Orion. Please join me in welcome welcoming them to the stage about this. >> Good us. >> So, let's start with the big picture. Seth, I'll start with you. You're sitting to my left. Why this deal? Why now? And one of the most striking features of this transaction is the division of roles. Glenor operates, Orion provides the capital. Why is that split attractive to each side and can this be replicated elsewhere? >> Yeah, let me just start very high level. I think all three of us can answer that question. But generally, if you look at the strategic partnership agreement, right, you're looking at a way for the US to re-engage in the Congo. And of course that flows through institutions in the United States and no better partner than Orion here. And so I think uh you know this is a great way to really put some meat on the bones of the SPA in a real way. And of course Glen Core and maybe Harry can talk about it a little bit more. We've been in the DRC for a long time. We have over 8,000 employees there. We've spent probably invested over$10 billion over the last 20 years. So this is a good way to take it to the next level in a way that also aligns with US policy goals. Yeah, I mean to echo what Seth said, like we've been in the Congo and Southern Africa for about 20 20 years and we've invested, as he says, about $10 billion and you know, we we've been pretty much are the only Western company there for a long time. Um, so to the extent that Orion are coming in and and supporting us there, you know, it allows us to kind of explore more opportunities and see if we can grow and and do more business there. And we're very excited um by what this opportunity brings. Michael, give us the Orion perspective. Obviously, the Critical Minerals Consortium was under negotiation for a very long time. This has kind of become one of its flagship efforts. Why did Orion go into this? >> Look, I think it makes a whole lot of sense when you think about what Orion does holistically. Um, you know, what we really do is we provide financing solutions to the mining industry. Uh, we are not operators, we are financial partners. And so what we like to do is find really good corporates, really good management teams who have values aligned with our own um and provide them capital to go and execute a business strategy in the sector. And so here in this partnership with Glenor, we have some of the best miners, some of the best operators in the entire world um who have been in this jurisdiction for, you know, as you said, for for many decades. And um it it I think it's really like a match made in heaven to be honest with you, given our respective backgrounds. And does that derisk some of the the risks maybe people associate with mining in the DRC? >> Certainly. Certainly. I mean the Glenor teams are boots on the ground. Um they know what they're doing. They've been operating forever in the country. It's an absolute gamecher in my opinion. >> Now Seth, I want to come back to you. The strategic partnership agreement which Chris talked about earlier in many ways is the pilot of what minerals diplomacy is on the African continent from a state department perspective. But this is ultimately a private sector transaction. How does that deal fit within the framework and what does that US government partnership Michael come to you after actually change for Orion? >> Well, I won't speak for the Orion part, but just generally in terms of of the commercial meets the political, I think what you're seeing globally, as you know, is um countries are looking at their resources. They're looking at what opportunities are there. And I think the word that comes to mind is partnership. And so, of course, Glen Core has been in the Congo for 20 years as a real partner. We're a taxpayer. We've invested in local infrastructure. I think we've spent $500 million or so rehabilitating one of the turbons of the Inca Dam. So, it I think it really crystallizes the opportunities for partnership. And then you layer in Orion, and I'll I'll let Mike talk about that, but we see lots of opportunities not only for the direct partnership in the mine and that infrastructure, but also all the ancillary benefits for the local economy as well. Yeah, and I would highlight as well it is a private sector transaction. Um, but the US government via the DFC and and the Orion CMC will be participating in this as well. And you know, as a partner, I think the US government is phenomenal. And if anyone here was listening to Chris uh talk earlier, you know, he was talking about the the US government involvement in so many of these projects really unlocks this GTG framework that generally sits above the mining companies. And for us as financers to be able to access that, I think it's invaluable. >> And what does that DFC capital what does it do for you? >> Well, I think just just that. I mean, it it provides us with an extra layer of political cover generally anywhere in the world. That's not specific to this transaction or or or to Africa. Um, but it allows us to have connectivity to the US government network. and not just us, but it allows our portfolio companies, the company we're ultimately investing in, to have access to that network as well. And and the benefits of that are sometimes tangible, sometimes intangible, but it's always for the positive in my opinion. >> And let me throw this next question up to whoever wants to answer it. The DRC has been asking for more American commercial engagement for many, many years. What has to happen for this transaction to mark the beginning rather than a one-off deal? Well, not everybody all at once. Well, >> you can take off. >> What do we have to do? Well, look, I think we have to demonstrate through this through this transaction that the the critical minerals or the strategic alliance between the US and the DRC works, right? This transaction is designed to uh to utilize that and to to show that hey, you know, Western investors can safely invest in the DRC. We've done it. You have to find good partners, people that know what they're doing, such as Glenor. Um, but it works and I think that's what we can do with this transaction. I think it's going to set as a benchmark for future investment into the country from the United States. >> Let me just add another thing there. I think there's a potential here for a positive flywheel effect >> because, you know, we're operating in DRC. Uh, we supply American customers with with Congo material. We operate uh in a sustainable way. again 8,000 employees most of whom are are Congalles led by Marie Shantel who you know well um you know Orion comes in others come in other companies as well from the United States and you start to have this effect where companies are saying wow this is a great place we can operate the American people through Congress and and the administration understand more of the benefits of a partnership between the United States and Congo and before you know it we have a whole different paradigm than we did five years ago. Yeah, absolutely. Harry Or, you know, one of the the topics that has come up today a few times is offtake. Chris talked about how important it is that offtake come back to the US. It may not always be an American minor, but it needs to, you know, some of that offtake has to make its way back to us for our manufacturing here. Orion through this can direct its share of production to nominated buyers. Yep. >> And from a trading perspective, how significant is that, right? And what would it change about where Congalles copper and cobalt end up? >> Yeah, I mean look, Glenker as a whole is, you know, on our trading side, we're in the service business, right? We provide customers what they need when they need it, right? So to the extent that Orion can kind of um ask for material to come at certain pl you know certain times to certain locations is what we do dayto-day. So it won't change anything to do with our business. The good thing is it allows you know Orion the US government effectively to call on units when they need them where they need them and we will make sure that they get the best service possible. Um obviously copper is very invogue at the moment a lot of copper is coming to the US which is great. So to the extent that they'll be able to call on copper cathodes we'll be able to do that and you know in future we'd like to see the cobalt hydroxide demand here in the US um coming to life. So, I know that there isn't the demand today, but in the future there will be, and we're very positive about that, and we'll support as best we can. >> What are the industries that drive that demand? >> I mean, look, the EVs have been a big part of um the kind of cobalt story for a long time. Um, and they're still the biggest consumer. Um, but the reality is, you know, energy storage, which is all connected to AI, is getting, you know, ever more interested in battery metals. Um so that's one of the places which are going to probably drive um battery metal demand. Um drones um and the defense sector need a lot of cobalt. So you know at the moment a lot of US cobalt demand is for aerospace and defense but you know in time we'd expect to see battery demand. Um yeah >> great Mike. Um, you know, we talk a lot about green field project development and obviously on the African continent, a lot of the new projects we will do will need to be green field, but is putting US backed capital behind existing producing assets like a missing middle model? >> I think it could be and and it's a really interesting place here. Um, it's going to be the catalyst for what we're trying to achieve um in terms of securing critical minerals, right? you you want to start with producing operations and then you want to move on to green field construction. Uh I think it it's one after the other, but I don't think there's a missing step per se. I think we're doing this in the right in the right sequencing. >> Okay. And so the US wants more supply, the DRC wants more investment, more jobs, infrastructure. There's obviously a clear energy shortage there and greater value addition. What does this partnership need to deliver to the congalles economy to ensure that endures? Obviously DRC has done a lot of things, right? Having spent time at your mine there. Um I remember hearing a little bit about how Glen Core pays to for summer camp to keep kids out of the mines, right? There's a lot of community benefits to what you guys do on the ground. But what does the partnership need to deliver to make sure that it goes beyond any one administration on either side? I think the mining industry brings such big dollars, right? Whereas high capex, they're strategic assets and they can be used as a catalyst, excuse me, for for other industries, for support industries, for infrastructure, for logistics, communications, etc., etc. So to me this is obviously for Orion and for Glenor this is about mining but I think for each respective countries this is about a greater opportunity to build around these mining assets and so as we talked earlier about other American capital coming into the country well it doesn't just have to be mining capital of course we want that we encourage that but that comes with uh infrastructure investors it comes with logistics investors etc etc and I think if we can demonstrate it can be done successfully that will follow and to me, you know, once you have that whole, you know, ecosystem around the mining sites start to be built up and and and developed, that is really a success story in my mind. >> And how scalable is this model? >> I think it's very scalable. I think again given what we do at Orion and and and providing capital to management teams and to corporates and given what Glen Coror doing on a day-to-day basis and moving commodities and and and mining commodities I think this can be replicated you know anywhere >> yeah I mean look >> I hope you feel the same >> no I certainly do um you know look it's worth noting you know there aren't just uh assets of the quality of KCC and MUMI everywhere you look so to the extent like this transaction is unique. It's two world class assets so that you know you can't replicate just everywhere sadly. Um but to the extent like good partners who complement each other and have different specialtities going and making investments across southern Africa in copper nickel whatever the commodity is you know it's very replicable and you know Glenor has having been there for such a long time is a comfort is a company which is comfortable looking at those opportunities and trying to work to support development >> that makes it an incredible precedent Yeah, >> no pressure. Thank you, >> Seth. What do you think the biggest constraints are to scaling it? >> Well, as we just heard, you know, KCC and Mumi are worldclass assets. So, I think you know looking into um you know what are other commodities, what are other where other mines where would be applicable investments for this sort of platform. Um but also I think we have to understand that the the US stakeholders are also important here too. So it's the DRC stakeholders, the US stakeholders. I think the American people are starting to understand the importance of mining and the importance of critical minerals. So I wouldn't say it's a constraint. I I'd say it's actually an opportunity because the more people learn about critical minerals and mining, it's a hot topic today. But again, it's still a small set of people who come to think tank events in Washington that are paying attention to critical minerals. But the more you can get people interested in the mining sector, you know, a few weeks ago, the president hosted uh mining school presidents and they're investing dollars into Colorado School of Mines, that actually can pay dividends with our partners in the Congo as well. And so again, if we can start building bridges between the United States, Congo, and other places as well, it's not just about the natural resources, it's also about the people. Um, and so that's where you're going to tie in things like education, which if not done correctly, can be a constraint, but if you invest in it, can actually help you do this at a even bigger scale. >> Thanks, Seth. Yeah, I mean, I think it's again that whole ecosystem of investments that make an opportunity. Mike, I want to come back to you. What still needs to be built around deals like this? You tal we've talked about infrastructure, we've talked about human capital, talked a little bit about finance, but what else needs to be to to make these projects compete effectively, especially if not everything is a tier one asset? >> Yeah, look, I mean, not not everything will be a tier one asset, of course, and and and some will be tier three, tier four, but you know, we what needs to be built, I guess it varies based on where you are in the world. um what what services are available, what teams are available. But generally, I would say what I think the biggest risk in in the mining industry or one of the biggest risks at the moment, so maybe I'll focus on that is is is people, it's management, it's teams, it's education. I mean, I I feel that there's a real gap of qualified individuals in the mining space on the technical side. And and look, we've talked about how in the United States now critical minerals and mining is is very in vogue and it hasn't been forever. I mean, this is the first time in my my career that, you know, mining is fun. It's cool. People are interested in what I do, which is which is great, but also, you know, that's only the start, right? And we need to we need to encourage young people to to study up and and to join this industry. And so I think it's a bit off piece from your question, but I think sort of more one-sizefits-all. That's what needs to be built is the teams and the people and the skill sets uh that come with operating these assets because it's it's unique. >> And Harry, stepping back just beyond this, I mean, you're a trader. You do this every day. Um stepping back, if we are to get more offtake to come to the United States, right? Uh they're not always obviously American miners. What do we need to do? How do we play better to get offtake to the US? >> Look, I think we, you know, we need to first and foremost, we need to be supportive of the companies who are already there. So, this deal case in point is is an example of the US government clearly being supportive of a company who is friendly towards uh towards the west. Um and so working with those companies which already exist I think making a success of this deal will then set the precedent for other companies to come in whether they'll be western aligned or American themselves. Um and I think you know there just needs to be a clear and consistent level of support um for this industry and for the good responsible players who are there and with time you know we'll see that that space grow and that'll be positive for the US no doubt. >> Thanks Harry and to close out I have a question one question that I hope all three of you will answer. 5 years from now, what needs to be true for each of you to say this partnership succeeded not only as an investment but as a model for US DRC, US Africa commercial diplomacy. >> Yeah. In five years, I want to see uh more in more places um with, you know, more friends getting into this space. I want to see more young people getting into this space. Um, I think people need to understand that the physical economy, real commodities, these things make everyday life possible. It's literally our slogan as a company because it's real. Um, I think in particular, um, you know, the potential, you know, for for transactions in in Congo and these sorts of partnerships, I think will showcase, um, kind of an entire new lens on the industry. And again, I also think the partnerships between the US and countries in Africa increasingly important. And we also need everyday Americans to understand why it's important. So we also need to expand the aperture of engagement um beyond DC, beyond the coast into all 50 states because everything is tied together. So hopefully in five years people will understand that >> makes it more politically durable too. >> Correct. >> Look, I mean from from my side I you know in the Congo as I've said before like Gleno has been pretty much the only Western company operating there. Um, and so a success for me would be to see more Western companies there. We wouldn't look at more companies as competition, but you know, friendly partners working in our in our ecosystem. So to see more of that would be an endorsement of what we've done on this deal. Um, and create a better environment for for us to operate in and and and would be net beneficial for the Congo as well. >> Absolutely. >> Good answers, guys. >> Hard going last. >> It is. It's tough. Thank you. Um I think from my perspective, I'll come back to that ecosystem point I made earlier. For me, in 5 years time, if we can, you know, the three of us reconvene and we can sit here and say, you know, after this transaction, we now have this new network of infrastructure built around the mines, we've helped more energy come into the country, etc., etc. I think that to me would be a huge success. Now, uh hopefully that can be western aligned and that will be American capital as well. That would be a cherry on top. But I think just to help stimulate the economies and the ecosystem around these mining sites and future mining sites I hope um to me would be a big success. >> Can I ask you one piggyback question? Is getting this western investment into the DRC this US governmentbacked investment. Is that more likely to turn around and have positive impacts on the infrastructure which maybe historically we've underinvested in? >> Speculating I have to imagine yes. I mean, I I don't see I don't see why this concept can't be replicated in other industries, this private public partnership. >> Agreed. >> Um, you know, why can't someone who's building cell phone towers do it, right? I mean, I think it's very replicable across the economy. >> And it derisks a lot of this investment, the more Western investment you have. >> Of course. Of course. If you have friendly neighbors and you have the US government, um, it d-risks a ton. Yeah. As I said, you have access to that network, that sort of G2G network that you wouldn't otherwise potentially have access to. It it really gives a really interesting layer of comfort. >> And I think this transaction in so many ways is a perfect example of good cooperation between the US government, the DRC government and key industry players to make this happen. Orion obviously long-standing uh you know very successful entity in the capital market space along with a very successful operator in the DRC and the only asset we have that has historically been fully westernowned. So thank you guys for all the work you've done. This is not a small undertaking and I know um we are fully going to realize the benefits of that soon. So thank you and thank you. Please join me in giving them a round of applause.