The Democratic Republic of Congo intends to increase its share in a cobalt and copper joint venture with Chinese companies to 70 per cent from 32 per cent, amid fears that the deal will deliver too many of Congo’s resources with little benefit to the country.
The plan to increase Congo’s share and have more control in the management of the Sicomines joint venture – currently dominated by Chinese companies – was outlined in a document seen by Reuters, which outlined Congo’s demands ahead of talks to revise a $6 billion mining infrastructure deal.
Congolese President Felix Tshisekedi, who is about to visit China, instructed his government on 19 May to proceed with the talks after Congolese stakeholders ‘consolidated their position’ on the 2008 agreement.
According to Congo, the unbalanced agreement leaves the country with few means to control its operations and the resources and revenues leaving the country.
In March, it ordered the creation of an ad hoc commission to harmonise the negotiating positions of the Congolese institutions responsible for overseeing the implementation of the agreement.
The commission comprised representatives of the presidency, the government, the state auditor, the Inspectorate General of Finance (IGF), the Agency for the Supervision, Coordination and Monitoring of Cooperation Agreements signed between the Democratic Republic of Congo and private partners, the state miner Gecamines, and civil society.
The committee reported that Congo should seek a larger stake in Sicomines because the 2008 agreement did not take into account an estimated USD 90.9 billion worth of reserves that Gecamines brought to the deal.
Sinohydro Corp and China Railway Group Limited had agreed to build roads and hospitals in exchange for a 68% stake in Sicomines, the cobalt and copper joint venture with Congo’s state-owned mining company Gecamines.
Congo is the world’s largest producer of cobalt, a battery material, and a major copper producer. The committee said Congo should demand a 60% stake in Sicomines for Gecamines and its subsidiary, a non-dilutive 10% stake for the state and 30% for Chinese companies, to make the joint venture agreement fairer for Congo.
The previous agreement provided for an amount of about USD 3 billion for infrastructure financing, including interest, but was insufficient compared to the value of the mineral reserves ceded by Gecamines.
“We have estimated that the infrastructure loan allocation should increase from $3 billion to $6 billion,” according to sources. “We will ask for a lump-sum compensation of $2 billion, among other things because Sicomines sold the minerals at half price to Chinese companies, well below the market price,” and that the fine will be for all damages suffered by Congo.
It is estimated that 90% of Congo’s mineral exports go to China, but its contribution to GDP is no more than 30%.