KOLWEZI, Democratic Republic of Congo, July 8 (Reuters) – W hen it was signed in 2007, China’s $6 billion ‘minerals for infrastructure’ deal in Congo stirred fears among Western countries that Beijing’s hunger for resources would erode their influence and saddle the vast central African country with unmanageable debt.
Eight years on, as Sicomines prepares to produce its first copper after long delays, the main lesson from the giant project is that investing in one of Africa’s most chaotic countries is a messy and frustrating business, no matter who you are.
While most mining projects in Congo go years before paying significant taxes under the mining code, Sicomines was meant to have an immediate economic impact. The government says the deal has already produced at least $800 million in infrastructure investment.
Chinese firms Sinohydro Corp and China Railway Group Limited are building roads and hospitals in exchange for a 68 percent stake in the Sicomines copper and cobalt mine, one of the largest in Africa with about 6.8 million tonnes in proven reserves.
China’s state-run Exim Bank and smaller Chinese banks are stumping up $3 billion for infrastructure plus a further $3 billion to develop Sicomines, with all the loans to be repaid with mining profits.
Yet production from the mine has been delayed and targets scaled back. Rather than unlocking Congo’s massive resource potential for China, the project has underscored the deterrents to investment, from crippling power shortages to asphyxiating bureaucracy and corruption, said Johanna Malm, a researcher at Roskilde University in Denmark and expert on the contract.
“I think the Chinese … are very hesitant to come into Congo after everything that has happened with Sicomines – after all the fuss, the problems, all the different things they struggled with.”
Congo, which extracted more than 1 million tonnes of copper for the first time in 2014, is Africa’s top producer. Industry giants including Freeport-McMoRan Inc. and Glencore have invested heavily in the sector since a peace deal drew a line under a 1998-2003 war that had killed millions.
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