Chinese companies are set to invest approximately $7 billion in infrastructure projects in the Democratic Republic of Congo (DRC), as revealed in details of a revised minerals deal published on Friday.
The success of these investments will hinge largely on the stability of copper prices, according to the agreement.
President Felix Tshisekedi’s administration sought to renegotiate the 2008 infrastructure-for-minerals deal with Sinohydro Corp and China Railway Group to ensure greater benefits for the DRC, which is the world’s leading cobalt producer.
The revised agreement, signed in March, maintains the existing ownership structure of the Sicomines copper and cobalt joint venture, with Chinese partners holding 68% and the Congolese state miner Gecamines holding 32%.
Under the terms of the agreement, the $7 billion investment will primarily fund the construction of roads in a country with limited infrastructure.
Funding for these infrastructure projects will be sourced from profits generated by Sicomines, which will also be used to repay loans from Chinese companies facilitated by Chinese banks on behalf of Congo.
Notably, the agreement stipulates that $324 million will be allocated annually to road infrastructure from 2024 to 2040, contingent upon copper prices remaining above $8,000 per metric ton.
However, the agreement includes provisions for adjustments based on fluctuations in copper prices.
If the price of copper increases by at least 50% from the specified threshold of $8,000 per ton, 30% of the additional profits will be directed towards financing additional infrastructure projects.
Conversely, if copper prices fall to $5,200 per ton or lower, Sicomines will cease funding infrastructure projects.
