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The Democratic Republic of Congo (DRC) is planning to raise its ownership in a joint cobalt and copper venture with Chinese firms from 32% to 70%. Concerns have been raised that the current deal disproportionately favors the Chinese companies and fails to provide significant benefits to Congo. The plan to increase Congo’s stake and gain greater control over the Sicomines venture, currently dominated by Chinese firms, was outlined in a document obtained by Reuters. This move comes as talks are set to take place to overhaul a $6 billion infrastructure-for-minerals agreement.
President Felix Tshisekedi of Congo, who is scheduled to visit China, has instructed his government to proceed with the negotiations after Congolese stakeholders consolidated their position on the 2008 deal. Congo believes that the current agreement lacks mechanisms to effectively manage the joint venture and ensure that the country benefits from its resources and revenue. In March, an ad hoc commission was established to harmonize the negotiating positions of Congolese institutions responsible for overseeing the execution of the deal. Representatives from various entities, including the presidency, government, state auditor, state miner Gecamines, and civil society, participated in the commission.
Two members of the commission, speaking on condition of anonymity, have confirmed the authenticity of the document and its conclusions, which have not been previously reported. These conclusions will serve as the basis for Congo’s upcoming discussions with the Chinese companies. Requests for comments from Congo’s government and the presidency have gone unanswered.
According to the document seen by Reuters, the commission has recommended that Congo seek a larger share in Sicomines due to the 2008 agreement’s failure to account for Gecamines’ estimated $90.9 billion worth of reserves brought into the deal. Power Construction Corporation of China, also known as Sinohydro, and China Railway Group Limited, the Chinese companies involved, have not responded to requests for comment.
The commission proposes that Gecamines and its subsidiary should hold a 60% stake in Sicomines, the state should have a non-dilutable 10% stake, and the Chinese companies should retain 30%. This allocation would make the joint venture more equitable for Congo. The commission also recommends an increase in the financing for infrastructure development from $3 billion to $6 billion to adequately compensate for the mineral reserves relinquished by Gecamines.
During the renegotiation talks, compensation will be a key point of discussion. Among other claims, Congo intends to seek a lump sum compensation of $2 billion, citing the Chinese companies’ purchase of minerals at below-market prices. It is estimated that 90% of Congo’s mining exports go to China, yet the contribution to the country’s GDP does not exceed 30%, according to Jean-Pierre Okenda, director of extractive industries for Resource Matters, an NGO advocating for greater transparency in the negotiations.
President Tshisekedi is expected to address these issues during his visit to Beijing. However, formal negotiations with the Chinese side will commence upon his return, as confirmed by one of the sources speaking to Reuters.
Source: USNews (Reuters)
