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(Bloomberg Gadfly) -- The Democratic Republic of Congo has been presented as a Glencore Plc trump card, but that's not to say this particular mining play is without risk.

On Monday, journalists delving into the so-called Paradise Papers shed more light on Glencore's activities in the mineral-rich African country, including a loan it made in 2009 to an entity affiliated with controversial Israeli billionaire Dan Gertler. 

For reasons of brevity, I won't go into the details: You can read the Guardian's report here, and a Bloomberg summary here. Both Glencore and Gertler deny wrongdoing (Glencore's statement is here). 

This long-running saga is a reminder, though, of DR Congo's importance to Glencore. After buying out Gertler's equity stakes in the Mutanda and Katanga mines for about $530 million in cash earlier this year, the Swiss-based resources company owns even larger interests in Congolese copper and cobalt deposits.

Glencore's timing was spot on. The price of cobalt has more than doubled over the past year amid investor excitement about the extra demand that will be created by lithium-ion batteries used in electric vehicles. Thanks to its Congolese assets, Glencore's share of global cobalt supply will rise to about 30 percent, estimates UBS. Chief executive Ivan Glasenberg thinks there could be a cobalt shortage in coming years and therefore further price increases.  

Such a supply squeeze would be great news for Glencore's cash flows, of course. A 10 percent increase in the cobalt price means an extra $150 million in Ebitda, estimates Barclays.  

Even so, there are plenty of reasons for caution when investing several billion dollars in DR Congo. The politics there remain fraught: President Joseph Kabila's reluctance to surrender power triggered demonstrations last year in which dozens were killed. Elections are due in December 2018.

Revisions to the country's mining code  -- and therefore the taxes Glencore must pay -- are a perennial concern. Congo's infrastructure remains sub-optimal too. Glencore's copper operations need a continuous high-voltage power supply.

Meanwhile, the drip-feed of negative headlines involving the dealings with Gertler doesn't exactly help.

Of course, like other miners before it, Glencore didn't prosper by balking at opportunities to develop resources where others feared to tread. In business, it's said there's no reward without risk. Glencore's Congo adventure provides plenty of both.

Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.   

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Chris Bryant is a Bloomberg Gadfly columnist covering industrial companies. He previously worked for the Financial Times.

To contact the author of this story: Chris Bryant in Berlin at cbryant32@bloomberg.net.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net.

©2017 Bloomberg L.P.

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