An estimated $324 million is to be invested annually in improving road infrastructure in the DRC over the next 16 years.
In a restructured copper and cobalt deal between the DRC and China, the latter has committed to spending a total $7 billion on infrastructure in the DRC, but the amount of funding is dependent on the copper price.
Engineering News reports that the funding for the infrastructure will come from the profits generated by copper miner Sicomines, which is jointly owned by Chinese partners with a 68% stake and DRC’s state-owned Gecamines with 32%. Part of the profits will also go towards reimbursing loans from Chinese companies.
The previous deal, which was signed in 2008, stipulated that 65% of the profits from Sicomines would go towards repaying that debt.
The deal was restructured this year so that the DRC could negotiate a more beneficial deal for the country, reports Mining.com.
The copper price is currently trading at a three-month average of more than $9 800 a ton on the London Metal Exchange, with it topping $10 000 earlier this month.
If the price tops $12 000, the percentage of profits dedicated to infrastructure will increase. If, however, the price drops below $8 000, the percentage will decrease.
And if the price should tank to below $5 200 a ton the funding deal will cease, according to Ecofin Agency.
On the downside, Sicomines remains exempt from paying taxes until 2040, which has been largely criticised by Congolese commentators, saying it is a huge loss to the country’s fiscus.
Other commentators on X have been largely positive, though some warned of the possibility of corruption.
Minerals for Infrastructure is a good deal,as long as the attendant risks are mitigated. This will translate to security stabilization,more so for the regions which these minerals are mined. The #GenocideInCongo must cease.
— Micky (@Michael_ouma) May 7, 2024
That could see good roads and other infrastructure in DRC but China should construct the roads directly from their companies including CRBC and others. Congo should get done roads equivalent to the exchanged value. If they get the liquid cash, roads will never be built.
— Daniel Nyagwara (@Nyagwara) May 7, 2024
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