News / Africa

Congo-China Mines Deal Hits Rough Patch

One of few remaining miners digs out soil which will later be filtered for traces of cassiterite, the major ore of tin, at Nyabibwe mine, in eastern Congo, Aug. 7, 2012.
One of few remaining miners digs out soil which will later be filtered for traces of cassiterite, the major ore of tin, at Nyabibwe mine, in eastern Congo, Aug. 7, 2012.
TEXT SIZE - +
Nick Long
Congolese media say a mines-for-infrastructure barter agreement between the Democratic Republic of Congo and a consortium of Chinese companies may be at risk because China's Exim Bank has reportedly withdrawn its support.

When the deal was announced five years ago it involved the Democratic Republic of Congo agreeing to give the Chinese consortium majority stakes in two of the biggest mines in the country, in exchange for $9 billion worth of infrastructure, including roads and a railway.

Under pressure from western donors, who objected to the DRC government’s offer of a state guarantee for the $9 billion when the Congo was asking them for massive debt relief, the deal was whittled down to $6 billion.

Five years on, people have been asking why there are still hardly any minerals coming out of the two mines and the infrastructure work has stalled. Media in Kinshasa have said it is because the bank that was supposed to finance the work, China Exim Bank, has pulled out.

Well kept secret

Those media reports drew on an academic article last month by Johanna Jansson, a Swedish academic.

"What happened was that Exim Bank wanted certain securities, which the Congolese and Chinese parties did not find reasonable, so Exim Bank pulled out. But the Chinese companies have remained committed," Jansson said.

China Exim bank withdrew its support from the project last year, Jansson said, but this seems to have been a fairly well kept secret.

Last week when Congo's prime minister, Matata Ponyo, was asked if Exim Bank had withdrawn from the project he said there was a problem to be discussed in depth with the Chinese partners.

Project status

On Monday, a government official said there was no problem between the DRC and China Exim Bank, but he stressed that it is up to the companies to find the finances.

"They have restarted work, so there is a financing arrangement, but I have not had time to confirm which bank is now in and what it looks like," Jansson explained when asked where the effort stands. "They were negotiating throughout 2012 with China Development Bank, and Bank of China and China Exim Bank, and when I was in Kinshasa up to end 2012 those negotiations were quite intense so I would think they have reached a financing arrangement with one of the banks by now."

Other observers do not agree that the mining company in the consortium, called Sinohydro, has restarted work on the project.  

Jean Pierre Muteba, spokesman for the civil society association of Katanga, where the two mines are located, said Sinohydro has done no work at the two mines since it finished a feasibility study two years ago. He said there is another company, CDM, which is doing some work there.

Muteba said CDM is a Chinese company that has started processing copper from the two mines and this might account for some people thinking the Sicomines project is back on track.

According to Muteba, the consortium has not done any work on the roads recently either.

Transparency

Another local activist, Jean Pierre Okenda, who works for the Extractive Industries Transparency Initiative, an international effort, said there needs to be more openness about the whole project.

He said there is no transparency in the infrastructure development program in Congo. The Congolese public, he says, does not know what infrastructure the Chinese companies are supposed to be building, nor do they know within what time frame.
 
But Jansson said there was never a time frame in the agreement and the figure of $3 billion to be spent on social infrastructure like roads is a maximum, not a firm commitment. This is not an aid project, said Jansson, it is a commercial deal.

"The contract provisions are such that the infrastructure will be constructed following the profitability of the mines," Jansson explained. "But the Chinese companies have advanced money, have been paying for infrastructure - quite significant amounts - before the mines started to produce, for goodwill basically."

The government announced recently that out of the potential $3 billion, the Chinese partners have so far spent $468 million on infrastructure, consisting of one hospital and two roads in the capital Kinshasa, one 90 kilometer road in Katanga, and another road of similar length in North Kivu.

The Sicomines contract also includes signature bonuses. Observers say it is not clear from government statements whether the second tranche of this bonus, $175 million, is supposed to go to the state mining company or to the national treasury.

You May Like

Multimedia Relatives of South Korean Ferry Victims Fire at Authorities

46 people are confirmed dead, but some 250 remain trapped inside sunken ferry More

War Legacy Haunts Vietnam, US Relations

$84 million project aims to clean up soil contaminated by Agent Orange More

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid