China’s cobalt mines in spotlight as DRC seeks to renegotiate deals
- ‘It is time for the country to readjust its contracts with miners to seal win-win partnerships,’ President Felix Tshisekedi tells Congolese people
- Beijing ready to strengthen ‘strategic partnership based on win-win cooperation’, China’s ambassador to DRC says
The Central African nation is the world’s biggest producer of cobalt, which is an essential component in the batteries used to power electric vehicles and appliances like smartphones, tablets and laptops.
However, President Felix Tshisekedi believes his predecessors in Kinshasa signed lopsided contracts with mining companies that denied the Congolese people – many of whom live in poverty – their fair share of benefits from the sale of their nation’s minerals, and he wants to renegotiate them.
On a visit last week to the mining town of Kolwezi in Katanga province, where about 40 companies – 30 of them Chinese owned – have mining operations, Tshisekedi told the public it was time to redress the balance.
“I have really had enough. I am very severe with these investors who come to enrich themselves. They come with empty pockets and leave billionaires,” he said.
“It is time for the country to readjust its contracts with miners to seal win-win partnerships.”
The deals had been “badly negotiated [by corrupt officials]”, he said. “Worse, the little which returns to the state, they put in their own pockets.”
Although Tshisekedi did not name any investors, there has been speculation he wants to review some of the deals signed with Chinese miners during former president Joseph Kabila’s administration.
Since 2012, Chinese companies have pumped more than US$10 billion into the DRC.
China’s ambassador to the Central African country said on Twitter this week that Beijing was “ready to strengthen … the strategic partnership based on win-win cooperation”.
Marco Giuli, a researcher at Vrije Universiteit Brussels, said China was unlikely to relinquish its presence in the DRC as it was of critical importance to its industrial ambitions.
“As critical raw materials are quite concentrated and demand is booming, it is to be expected that exporters seize the moment to impose renegotiations and even turn to resource nationalism,” he said.
Chris Berry, president of commodities advisory firm House Mountain Partners in New York, said that with copper prices recently at an all-time high, it was “not at all surprising to see government officials want to renegotiate contracts with foreign entities”.
But he said it was unlikely that the DRC seeking better deals would alter Chinese or other foreign firms’ approach to investing there.
“China has such an enormous presence in the DRC and Africa overall that I seriously doubt that Chinese investment in copper in particular would cease,” he said.
The DRC controls more than 60 per cent of the world’s reserves of cobalt ore. China Molybdenum, which owns the world’s second-largest cobalt mine – Tenke in the DRC – recently bought the Kisanfu resource from Freeport McMoRan for US$550 million. China is the world’s biggest importer of cobalt, buying about 95,000 tonnes of it every year.
Other Chinese companies operating in the DRC include Huayou Cobalt, Chengtun Mining, Wanbao and CNMC.
One of the biggest deals signed during Kabila’s time in office was in 2008, when state-owned Congolese commodity trading and mining company Gecamines formed a joint venture named Sicomines with a consortium of Chinese firms led by Sinohydro and China Railway Engineering Corporation to develop a copper and cobalt mine.
China Eximbank then awarded Sicomines two credit lines totalling US$6.2 billion for the development of the mine and public infrastructure projects, according to New York-based NGO Natural Resource Governance Institute.
The DRC agreed to pay back the funding with future copper and cobalt output from the project in a concept known as resource-backed loans.
However, such deals have been criticised by NGOs like Global Witness for their lack of transparency and allegations of Congolese politicians benefiting from them more than the public.