Democratic Republic of Congo should renegotiate its US $6billion infrastructure-for-minerals deal with Chinese investors, according to the draft of a report commissioned by a global anti-corruption body of governments, companies and activists.
The draft, describes the deal that was first signed in 2008 as “unconscionable” and urges Congo’s government to cancel an amendment signed secretly in 2017 that sped up payments to Chinese mining investors and slowed reimbursements of investment in infrastructure.
Democratic Republic of Congo should renegotiate its US$6 billion infrastructure-for-minerals deal with Chinese investors, according to the draft of a report commissioned by a global anti-corruption body of governments, companies and activists.
The draft, seen by Reuters, describes the deal that was first signed in 2008 as “unconscionable” and urges Congo’s government to cancel an amendment signed secretly in 2017 that sped up payments to Chinese mining investors and slowed reimbursements of investment in infrastructure.
Under the 2008 deal struck with the government of former President Joseph Kabila, Chinese state-owned firms Sinohydro Corp and China Railway Group Limited agreed to build roads and hospitals financed by profits from Congo’s Sicomines cobalt and copper joint venture.
Joint-venture convention
China Railway had no immediate comment. Sinohydro did not respond to a request for comment. Fred Zhang, a senior Sicomines official, defended the deal in comments to Reuters last week, saying it had driven development for Congo’s people and Sicomines would disburse more funds as production rose
The draft, written by two Congolese consultants, recommends “the denunciation by the Congolese state of the unconscionable character of the joint-venture convention of April 22, 2008 and the return to the negotiations table by Sicomines shareholders”.
It says the Chinese companies’ 68% stake in Sicomines is too high since the Congolese contributed all the mining assets and 32% of the initial capital. It condemns the previously undisclosed 2017 amendment.
Under the 2008 contract, all of Sicomines’ profits would initially go to reimbursing investments in Congo’s most urgent infrastructure projects. It was on that basis that parliament agreed to exempt Sicomines from all taxes, the draft says.
Under the 2017 amendment, seen by Reuters, only 65per cent of Sicomines’ profits must initially go toward reimbursing the investments while 35per cent goes to shareholders. The change could further slow the pace of the infrastructure projects, the draft says. To date, less than US$1 billion of the expected US$3 billion has been invested, about US$1 billion less than projected at this stage, it says.
“This amendment constitutes a violation of the security of the interests of the Republic,” the draft says.
The draft report calls for re-evaluating Sicomines’ reserves, saying a 2010 feasibility study 2010 was flawed, and cancelling another contract with the same Chinese investors to build a hydroelectric dam.
