Congolese earned ‘nothing’ from cobalt mine deal
President says US$6b project launched in 2008 exploited his nation and its vast mineral wealth
As much of the world electrifies its cars, countries are relying ever more heavily on the Democratic Republic of the Congo. The central African nation produces two-thirds of the global supply of cobalt – an essential component of electric vehicle batteries.
That should make the Congolese happy. But reality says otherwise.
The people believe they have been short-changed by foreign companies that control the mining and processing of the metal. President Felix Tshisekedi stirred up a storm last year, accusing his predecessors of having signed lopsided contracts with mining companies – most of them Chinese – and saying he wanted to renegotiate them.
Tshisekedi’s campaign has received rare support from opposition politician Adolphe Muzito, who agrees that Congo has benefited little from mining deals with Chinese companies.
Muzito served as prime minister under president Joseph Kabila’s administration between 2008 and 2012, under which the country awarded mega infrastructure-for-minerals deals.
The current government says those deals were skewed in favour of foreign companies and elite Congolese politicians.
“My country did not get anything out of the Sino Congolaise des Mines [Sicomines] agreement,” Muzito said of a US$6 billion infrastructure-for-minerals deal signed by the Kabila government with Chinese investors in 2008.
The agreement allowed Chinese companies to be offered cobalt and copper in exchange for infrastructure construction.
As part of the deal, Congolese state-owned 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 for US$9 billion.
However, the value was renegotiated to US$6 billion after a push from the International Monetary Fund, over fears that it could worsen Congo’s debt woes. The entry of China into Congo had filled a void left by Westerners, “although they are historically and geopolitically closer to us”, Muzito told the Post. “Nature doesn’t like emptiness.”
Out of the US$6 billion deal, China was to use US$3 billion to invest in the mining industry and put the rest into infrastructure.
However, the Chinese firms started exploiting the minerals even before the US$3 billion that was to go into building infrastructure had been disbursed, Muzito said.
“Only US$800 million was disbursed but still no infrastructure in sight. This is injustice,” he said in Brussels last week.
Congo controls more than 60 per cent of the world’s reserves of cobalt ore, which is mostly exported to China for processing to make batteries for electric cars, weapons, machinery and electronics.
Muzito said that as Congo moved to review mining contracts, it was important to ensure legally fair and transparent renegotiation “to find a fair solution which preserves the rights of investors and the Congolese people”.
A recent investigation by a global consortium of media publications and NGOs found that the Chinese owners of some of Congo’s prized copper and cobalt mines used one of Africa’s largest banks to channel at least US$138 million in public funds to Kabila’s family and associates, according to Bloomberg.
Congo is also under pressure from the IMF to “clean up lopsided mining agreements granted to foreign firms” as a precondition for a US$1.5 billion credit line.
However, while Kinshasa maintains it has not benefited much from the Sicomines arrangement, China says it has built several projects in the country despite obstacles, including a lack of electricity.
China’s foreign ministry last year defended the deal, saying the model had not only increased tax revenue and created more jobs in the country but had also provided investment in infrastructure projects such as roads, hospitals and hydropower stations.
Still, big power rivalry over mineral wealth might not benefit Congo, Muzito said. “When two elephants fight, the grass suffers. We don’t want [Congo] to be the grass that suffers.
“We, ourselves, have to be organised. We need to establish our resources before putting them on the capitalist market – whether it is Western or Eastern, that’s not what matters.
“What matters is that we get our deserving benefits in this balance of power.”