An article published on Friday revealed that Chinese companies are set to invest around $7 billion in infrastructure projects in the Democratic Republic of Congo (DRC) as part of a revised minerals deal. This investment will be closely linked to copper prices.
The government of President Felix Tshisekedi pushed for a review of the 2008 infrastructure-for-minerals deal with Sinohydro Corp and China Railway Group to secure better terms for the DRC, which is known as the world’s largest cobalt producer. The revised agreement was signed in March.
Under the new agreement, the parties have agreed to maintain the current shareholding structure of their Sicomines copper and cobalt joint venture, with 68% held by the Chinese partners and 32% by the DRC state miner Gecamines.
The agreement, which was previously undisclosed, outlines several conditions for the $7 billion investment, including the construction of much-needed roads in a country lacking in infrastructure.
Funding for the infrastructure projects will come from Sicomines’ profits, with a portion used to repay loans from Chinese banks on behalf of the DRC.
A notable detail is that $324 million will be allocated annually for road infrastructure from 2024 to 2040, subject to copper prices remaining above $8,000 per metric ton.
However, if copper prices exceed $8,000 per ton by at least 50%, 30% of the additional profits will be used to finance extra infrastructure projects, as outlined in the detailed agreement published on a government website.
The agreement also states that if copper prices fall to $5,200 per ton or lower, Sicomines will stop financing infrastructure projects.
Additionally, Sicomines will be exempt from paying taxes until 2040, a provision that has been criticized by Congolese and international civil society organizations for its perceived impact on state revenue.
Congo, the world’s third-largest copper producer with significant deposits of lithium, tin, and gold, among other minerals, has committed to transparency by pledging to publish all mining contracts.
This commitment is part of a three-year program with the International Monetary Fund (IMF), with an ongoing IMF staff mission in the country until May 8 to assess the final review of the program.
