The Democratic Republic of Congo plans to significantly increase its stake in a cobalt and copper joint venture with Chinese firms, aiming to raise its share from 32% to 70%. This move comes over concerns that the current deal, which sees the Chinese companies dominate the venture, has not provided adequate benefits to Congo, particularly in terms of resource control and revenue.
The plan to adjust Congo’s stake and secure greater oversight of the Sicomines venture was outlined in a document obtained by Reuters. The proposal is part of the country’s effort to renegotiate a $6 billion infrastructure-for-minerals agreement signed in 2008. Congolese President Félix Tshisekedi has instructed his government to proceed with talks after a series of consultations with stakeholders, aiming to revise the terms of the deal that Congo argues has left it with minimal control over the venture’s operations and the resources being extracted.
To help guide the negotiations, Tshisekedi established an ad hoc commission in March, which included representatives from various Congolese institutions such as the presidency, government, state auditors, Gecamines (Congo’s state mining company), and civil society groups. The commission’s conclusions, which were not previously disclosed, suggest that Congo should seek a greater stake in Sicomines, especially considering the $90.9 billion worth of mineral reserves contributed by Gecamines at the time of the original deal.
Under the existing agreement, Chinese firms Sinohydro and China Railway Group Ltd hold a 68% stake in Sicomines in exchange for constructing roads and hospitals in Congo. The document outlines a proposal for Congo to acquire a 60% share for Gecamines and its subsidiary, a non-dilutable 10% for the state, and leave 30% for the Chinese companies, aiming for a more equitable partnership.
Furthermore, the commission argues that the $3 billion initially set aside for infrastructure development is insufficient, especially given the value of the mineral reserves given up by Gecamines. It recommends increasing the infrastructure fund to $6 billion. Additionally, the commission intends to seek compensation for Congo, including a lump sum of $2 billion for damages, citing the sale of minerals to Chinese firms at prices well below market value.
Jean-Pierre Okenda, from the NGO Resource Matters, highlighted that while 90% of Congo’s mining exports go to China, the sector’s contribution to the country’s GDP remains under 30%. Tshisekedi is expected to address these issues during his upcoming trip to Beijing, although the real negotiations are expected to commence after his return.
