Chinese companies increase investments in copper-cobalt JV

News Analysis

8

Feb

2024

Chinese companies increase investments in copper-cobalt JV

  • Reitumetse Chalale

Sinohydro Corp and China Railway Group will invest up to US$7Bn in infrastructure as part of their Sicomines Cu-Co JV agreement in the DRC.

According to the new agreement, DRC state-owned miner Gécamines (32%), Sinohydro (25.28%) and China Railway Group (41.72%) will maintain their current shareholding structure for Sicomines. However, the Chinese partners will pay 1.2% of royalties annually to the DRC and increase their spending on infrastructure from US$3Bn to US$7Bn.

This agreement follows DRC President Felix Tshisekedi’s visit to China in May 2023 where under a joint statement with President Xi Jinping, both countries announced that they were upgrading "…the bilateral relationship from a win-win strategic cooperative partnership to a comprehensive strategic cooperative partnership”, according to a Chinese foreign ministry statement.

Over the past two years, Tshisekedi’s administration has been determined to revisit the 2008 agreement that was made by his predecessor Joseph Kabila in which the Chinese partners had agreed to build roads and hospitals in exchange for a 68% stake in the JV with Gécamines. The Chinese investors committed to spending $3Bn on the infrastructure projects, but in February 2023, Congo's state auditor Inspection Generale des Finances (IGF) demanded an additional US$17Bn. The auditor, and the Tshisekedi Government, are concerned that too much of the DRC’s Cu-Co resources were given away during the Kabila era, with little benefit to the country. Reportedly the Chinese partners had only built infrastructure estimated to be worth US$822M.

The revised agreement deviates from Tshisekedi's initial plans before he visited China, where he had aimed to boost the DRC’s stake in the Sicomines JV from 32% to 70%. However, the head of the IGF is pleased with the new deal and describes it as a “win-win” situation despite Sicomines being flagged for being exempted from paying taxes.



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