Kinshasa reviews mining deal with Chinese firms to seal loopholes

Sunday February 04 2024

Men work in a gold mine in Chudja, near Bunia, north eastern Congo on February 23, 2009. PHOTO | AFP


The Congolese government says it has rectified a controversial mining deal it had signed with China, potentially upending what had looked like a source of bad relations between Kinshasa to Beijing.

The new deal, officials said this week, is a result of open negotiations with Beijing. It came 16 years after the two sides signed what the Congolese authorities had called “the contract of the century.”

But since 2008, especially under the President Felix Tshisekedi administration, officials have often accused China’s of exploitation, arguing they mined critical metals from the DRC without being compelled to give back to local communities.

On January 29, officials said the contract had been amended to provide specific obligations to Chinese mining firms, including improving local infrastructure for the Congolese.

Read: DRC reviews 'bad' mining contracts with China

Authorities said the new deal is worth $5.8 billion. André Wameso, President Félix Tshisekedi's Deputy Director of Cabinet, Inspector-General of Finance Jules Alingete, Infrastructure minister Alexis Gisaro and Government Spokesman Patrick Muyaya said Chinese companies, which had paid just $1.2 billion over 15 years, would have to add nearly $6 billion over the next 20 years.


Mr Alingete, whose investigations in 2023 led to a conclusion that there was an imbalance between the Congolese state and Chinese companies, said on Monday that: “These companies have agreed to build a total of 7,000 kilometres of roads in the DRC, worth $7 billion.”
The project will take 20 years to complete.

"The Chinese side has undertaken to build 650 kilometres of roads worth $624 million in 2024. Each year, DRC will benefit from $324 million to finance road construction," added Mr Gisaro.

The DRC would like to invest massively in road construction to link its provinces.

Read: Tshisekedi set for China visit, minerals deal in the offing

Under the renegotiated contract, the Chinese will continue to benefit from a tax exemption of some $100 million. The DRC should also benefit from $240 million in royalties on the annual turnover of Sicomines, a company set up to manage the dividends from mining under the contract.

The renegotiated contract gives the Congolese side a larger stake in this company, whereas the Chinese side had a majority stake.

The battle to rebalance the Chinese contract began two years after President Félix Tshisekedi came to power. In 2021, the government asked the Extractive Industries Transparency Initiative (Eiti) to examine the execution of the Chinese contract. The same task was entrusted to the Inspectorate-General of Finances.

President Tshisekedi had already denounced the imbalance in the contract.

The Congolese authorities criticised for signing a contract that was largely profitable for Chinese companies, to the detriment of the Congolese state. As for the development of the mining sector, the DRC criticised a "worrying and deplorable" imbalance. In 2008, the contract was initially worth $9 billion.

After pressure from the International Monetary Fund, it was reduced to $6.5 billion, with $3.5 billion for the mining project and $3 billion for the infrastructure project.

Read: DRC agrees to IMF deal but players worry over looming purge of sector

Fifteen years after the contract was signed, the Inspector-General of Finances, after investigations, concluded in a report in 2023 that the DRC "had benefited from infrastructure worth only $822 million dollars, while the Chinese party had reaped almost $11 billion.”

Alingete's conclusions almost led to a diplomatic row between the DRC and China. In May 2023, President Félix Tshisekedi, accompanied by a dozen or so ministers at the invitation of Chinese officials, travelled to Beijing, Shanghai and Shenzen, where he met President Xi Jinping and other Chinese officials and economic players. No new details emerged from the trip, except officials told journalists in Kinshasa days later that the trip was successful.

Well before flying to China, President Tshisekedi and his government had set up a "strategic committee" to work with the Chinese side to reach an additional contract aimed at correcting the flaws and imbalances in the previous contract. The Congolese president had asked the members of the "strategic committee" to "agree and organise with the Chinese party, within a short period of time, the agenda for discussions and the final signature of the future rider".

of the future rider". A large number of experts from the EITI, the Inspectorate-General of Finance, the Steering, Coordination and Monitoring Agency for the Collaboration Agreements signed between the Democratic Republic of Congo and the European Union, and the Chinese government also attended the meeting.

République Démocratique du Congo and private partners were added to the "strategic committee" to deepen the discussions.
After four days in China, Congolese officials returned to Kinshasa, keeping the discussions with the Chinese authorities almost secret.