Kinshasa revises mining deal with Chinese firms to close loopholes

Summary:

• The Congolese government has successfully renegotiated a mining agreement with China, addressing longstanding concerns of exploitation and imbalance. The new deal, reached after transparent negotiations, requires Chinese mining firms to invest $5.8 billion over 20 years in local infrastructure, including the construction of 7,000 kilometers of roads.

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The Congolese government announced the resolution of a contentious mining agreement with China, potentially averting strained relations between Kinshasa and Beijing.

According to officials, the new agreement emerged from transparent negotiations with Beijing, marking a significant development 16 years after the initial signing of what Congolese authorities dubbed “the contract of the century.”

Since 2008, particularly under President Felix Tshisekedi’s administration, officials have accused Chinese entities of exploiting critical minerals from the DRC without adequately benefiting local communities.

On January 29, officials disclosed amendments to the contract, obligating Chinese mining firms to invest in local infrastructure in the DRC.

The revised deal is valued at $5.8 billion, with Chinese companies, who had previously paid $1.2 billion over 15 years, now committing to nearly $6 billion over the next 20 years.

Notably, Chinese firms agreed to construct 7,000 kilometers of roads in the DRC over two decades, totaling $7 billion. Initial road construction in 2024 will span 650 kilometers, valued at $624 million, with annual allocations of $324 million for road development.

The DRC aims to heavily invest in road infrastructure to connect its provinces.

Under the renegotiated terms, China retains a tax exemption of approximately $100 million, while the DRC stands to gain $240 million in royalties annually from Sicomines, a company overseeing mining dividends.

The renegotiation also grants the Congolese government a larger stake in Sicomines, reversing the previous Chinese majority ownership.

Efforts to rectify the imbalanced contract commenced two years into President Tshisekedi’s tenure, with inquiries by the Extractive Industries Transparency Initiative (EITI) and the Inspectorate-General of Finances revealing discrepancies favoring Chinese entities.

Tshisekedi had criticized the contract’s inequity, prompting scrutiny from international bodies like the IMF.

After investigative findings, which showed China’s significant gains compared to the DRC’s minimal infrastructure benefits, tensions escalated, culminating in Tshisekedi’s diplomatic visit to China in 2023.

Prior to the trip, Tshisekedi’s administration established a strategic committee to renegotiate the contract with Chinese counterparts, involving experts from various agencies and private partners.

After negotiations in China, officials returned to Kinshasa with discreet outcomes, marking progress in rectifying the contentious mining agreement.