According to a draft study commissioned by a worldwide anti-corruption body of governments, firms, and activists, the Democratic Republic of Congo should renegotiate its $6 billion infrastructure-for-minerals contract with Chinese investors.
The draft seen by reporters calls the 2008 agreement “unconscionable” and asks Congo’s government to revoke a secretly signed modification in 2017 that accelerated payments to Chinese mining companies and halted reimbursements for infrastructure projects.
The Extractive Industries Transparency Initiative (EITI), which examines money flows in the oil and mining sectors and has more than 50 nations as members including Congo, is due to release the final report this month.
The study has no legal standing, but if the draft’s key conclusions are upheld, it might bolster Congo’s efforts to get better mining terms from Chinese companies.
After claiming that Congo was not getting a fair deal, President Felix Tshisekedi’s government is revisiting the 2008 contract and reserve levels at China Molybdenum’s Tenke Fungurume mine.
“There has to be some adjustment,” Prime Minister Sama Lukonde Kyenge said at a mining conference on Thursday.
Congo, the world’s leading producer of the battery element cobalt and Africa’s top copper miner, has taken a rare stand against Chinese businessmen who control the majority of the country’s mining industry.
Sinohydro Corp and China Railway Group Limited committed to building roads and hospitals with income from Congo’s Sicomines cobalt and copper joint venture as part of a 2008 agreement with former President Joseph Kabila’s government.
Few of such initiatives, according to critics, have been completed.
The Congo’s government spokesman said he hadn’t read the text and couldn’t comment. The EITI’s Congo headquarters pointed reporters to the mission’s terms of reference and declined further comment. A spokesperson from Sicomines did not reply to inquiries for comment.
China Railway did not respond to a request for comment. A request for comment from Sinohydro was not returned.
In comments to reporters this week, Fred Zhang, a senior Sicomines executive, defended the contract, saying it had fueled development for Congo’s people and that Sicomines would continue to release additional monies as output increased.
‘DENUNCIATION’
The proposal drafted by two Congolese consultants, calls for “the Congolese state to denounce the unconscionable character of the joint-venture convention of April 22, 2008, and Sicomines stockholders to return to the negotiating table.”
The Congolese supplied all the mining assets and 32 percent of the initial cash, thus the Chinese businesses’ 68 percent interest in Sicomines is excessive, according to the report.
It condemns the 2017 amendment that was previously unreported.
Under the terms of the 2008 agreement, Sicomines’ income would be used to reimburse expenditures in Congo’s most pressing infrastructure projects. According to the text, it was on this basis that parliament agreed to exempt Sicomines from all taxes.
According to the 2017 amendment, only 65 percent of Sicomines’ income must go toward reimbursing the investments at first, with the remaining 35 percent going to shareholders, as noted by reporters.
According to the proposal, the move might significantly impede the pace of infrastructure construction. It claims that fewer than $1 billion of the estimated $3 billion has been invested to date, which is around $1 billion less than predicted at this point.
“This amendment is a violation of the Republic’s security and interests,” the proposal states.
The draft report recommends re-evaluating Sicomines’ reserves, claiming that a 2010 feasibility assessment was incorrect, and canceling a contract to build a hydroelectric project with the same Chinese investors.
