Daily Management Review

Draft Report By EITI Recommends Renegotiating Congo's $6 Bln China Mining Deal


Draft Report By EITI Recommends Renegotiating Congo's $6 Bln China Mining Deal
The draft of a report commissioned by a global anti-corruption body of governments, companies, and activists has warned that an infrastructure-for-minerals deal with Chinese investors worth $6 billion should be renegotiated by the Democratic Republic of Congo.
According to reports, data in the draft shows that initially the deal was signed in 2008 as "unconscionable" and urges the Congo government to cancel an amendment that signed secretly in 2017 resulting in speeding up of payments to Chinese mining investors while also showing reimbursements of investment in infrastructure.
The Extractive Industries Transparency Initiative (EITI) is expected to release a final report later this month. The EITI is engaged in tracking revenue flows in the oil and mining sectors and there are more than 90 countries as it members including Congo.
There are no legal implications of the report but if the final report contains the conclusions of the draft report, it would mean an implication on the Congo government to strive to ensure a better deal with terms in their favor in the mining contracts with Chinese investors.
The administration under President Felix Tshisekedi has said that Congo was not getting a fair deal and is currently reviewing the 2008 deal as well as the reserve levels at China Molybdenum's Tenke Fungurume mine.
"There has to be some adjustment," said Prime Minister Sama Lukonde Kyenge at a mining conference on Thursday.
These developments mark a rare pushback by Congo, which is the leading producer in the world of the battery metal cobalt and is the top copper miner of Africa, and opposition of the Chinese companies that control most of the mining industry of the country.
The 2008 deal was signed between the government of former President Joseph Kabila and Chinese state-owned firms Sinohydro Corp and China Railway Group Limited under which the Chinese firms were supposed to build roads and hospitals funded by the profits made from cobalt and copper joint venture of Sicomines of Congo.
However, just a few of those projects have been realized, say critics.
He had not read the draft and could not comment, said Congo's government spokesman. No comment was available from China Railway and Sinohydro.
The deal was defended by Fred Zhang, a senior Sicomines official, according to reports, and argued that development for Congo's people had been possible by the deal and with an increase in production more funds would be disbursed by Sicomines.
The recommendations in the draft report, written by two Congolese consultants, say that "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".
Since the Congolese contributed all the mining assets as well as 32 per cent of the initial capital, the 68 per cent stake in Sicomines of the Chinese companies was too high.
The previously undisclosed 2017 amendment was also condemned in the report.
"This amendment constitutes a violation of the security of the interests of the Republic," the draft says.