China to pay 1.2% royalties and spend $7b on infrastructure in exchange for ownership of Congo mines.

Chinese construction companies said on Saturday that they have reached a deal over their Sicomines copper and cobalt joint venture in the Democratic Republic of Congo, which includes an investment of up to $7 billion in infrastructure projects.

Both parties decided to keep the current shareholding structure in place, and according to a statement, the Chinese partners Sinohydro Corp. and China Railway Group Limited will give Congo 1.2% of their yearly royalties.

The administration of President Felix Tshisekedi has been examining the agreement made by his predecessor, Joseph Kabila, in which the Chinese partners promised to construct clinics and roads in return for a 68% share in the joint venture with the government-owned mining company Gecamines in the Congo.

The state auditor, Inspection Generale des Finances (IGF), last year insisted that the Chinese investors’ $3 billion commitment to infrastructure projects be expanded to $20 billion.

Tshisekedi gave his government the order to negotiate with the investors in advance of a May 2023 visit to China. His goal was to increase Congo’s share of the joint venture from 32% to 70%.

IGF head Jules Alingete stated during a press conference, “It is a win-win deal,” but he acknowledged that the negotiations had not been simple.

The leader of the Congolese Anti-Corruption League, Ernest Mpararo, hailed the decision as a positive move but pointed out that Sicomines continued to enjoy tax exemptions.

He also indicated the amount still owed under the previous contract. Out of the $3 billion planned for infrastructure projects, just $822 million had been invested, according to a 2023 IGF report.

The largest producer of cobalt in the world, which is essential to the batteries used in electric vehicles and cell phones, is Congo. It is also the third-biggest producer of copper in the world. Chinese enterprises predominate in the majority of its mining industry.

In his inaugural speech on January 20, Tshisekedi—who was elected to a second term in December—had hinted at the arrangement.