Congo and China in Discussions for $7 Billion Finance Deal

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Chinese construction companies have pledged to invest up to $7 billion in infrastructure projects as part of an agreement concerning their Sicomines copper and cobalt joint venture in the Democratic Republic of Congo, announced on Saturday.

The agreement stipulates that the current shareholding structure will be maintained, with Sinohydro Corp (SINOH.UL) and China Railway Group Limited, the Chinese partners, paying 1.2% of royalties annually to Congo, as per a joint statement.

President Felix Tshisekedi’s administration had been reassessing the deal initiated by his predecessor Joseph Kabila, in which the Chinese partners undertook to construct roads and hospitals in exchange for a 68% stake in the joint venture with Congo’s state mining company Gecamines.

Initially, the Chinese investors committed to allocating $3 billion towards infrastructure projects. However, the state auditor – Inspection Generale des Finances (IGF) – urged last year for an increase in the commitment to $20 billion.

Ahead of a visit to China in May 2023, Tshisekedi instructed his government to engage in discussions with the investors with the aim of boosting Congo’s stake in the joint venture to 70% from 32%.

Jules Alingete, head of the IGF, described the agreement as a “win-win deal” during a press conference but acknowledged that negotiations had been challenging.

Ernest Mpararo, leader of the Congolese Anti-Corruption League, welcomed the announcement as progress but raised concerns about Sicomines’ exemption from tax payments and highlighted outstanding payments under the previous agreement. A 2023 IGF report revealed that only $822 million of the promised $3 billion for infrastructure investments had been utilized.

The Democratic Republic of Congo is the world’s largest cobalt producer, a crucial element in electric car and mobile phone batteries, and the third-largest copper producer. Chinese companies largely dominate its mining sector.

Tshisekedi, who secured a second term in December, had hinted at the agreement in his inauguration speech on January 20.