Democratic Republic of Congo expects to reach an agreement on overhauling $6 billion of an infrastructure-for-minerals deal with Chinese investors this year, Finance Minister Nicolas Kazadi told Reuters in an interview.
The government is in active talks with representatives of Sicomines, a cobalt and copper joint venture with Chinese state-owned firms, as well as China’s CMOC Group Ltd (603993.SS) massive Tenke Fungurume (TFM) copper and cobalt mine, Kazadi said via videolink from the World Economic Forum in Davos, Switzerland.
“It’s important for us to have clear agreement because this is what we have now to finance our development,” he said.
President Felix Tshisekedi’s government has been revisiting a 2007 deal struck by his predecessor Joseph Kabila under which Sinohydro Corp (SINOH.UL) and China Railway Group Limited agreed to build roads and hospitals in exchange for a 68% stake in the Sicomines venture as well as a 2008 contract with CMOC.
“We have already a framework, we have some key elements of change that we want to bring in that agreement,” Kazadi said of Sicomines, though he declined to provide further details.
Speaking about challenges in Congo’s vast small-scale mining sector, Kazadi said a recently announced joint venture with the United Arab Emirates designed to end the illicit movement of precious metals from the country was a game changer.
“In only five days they have managed to burn and export 27 kilograms,” Kazadi said, speaking of the joint venture that is owned 55% by the United Arab Emirates with the remainder owned by Kinshasa.
The countries along Congo’s eastern border have long been conduits for gold worth billions of dollars mined using rudimentary means by so-called “artisanal” miners.
“It will completely change the situation in Rwanda, and this is one of the reasons why Rwanda is absolutely angry with us, they are fighting us – that is the reality,” Kazadi said.
Late last year, fighting intensified in Congo’s east between the Congolese army and the M23 rebel group, causing a diplomatic rift between the two nations with Congo accusing neighbouring Rwanda of backing the M23, which Kigali denies.
The conflict has also hit Congo’s finances, with emergency spending in 2022 making up as much as 12% of total government spending and breaching the threshold of 10% for the first time in years, said Kazadi.
Asked about concerns raised by the International Monetary Fund over Congo’s surging emergency spending, Kazadi said the country had “a lot of spending linked to the war and the IMF, they know that.”
The Kinshasa government also expects to reach “an agreement by April” on financing of up to $1 billion from the IMF’s Resilience and Sustainability Trust (RST).
“We are working with the IMF to find a good programme with good objectives,” Kazadi said, adding that the lending facility for climate and pandemic preparedness should target rainforest, water, and energy.
Congo, he said, is also exploring the possibility of applying to the IMF’s food shock window, an emergency funding programme the Washington-based lender launched last year to help countries facing food price shocks after Russia’s invasion in Ukraine. Kinshasa aims to get access to $200-300 million.
Congo is also in talks with its financial advisers on the possibility of tapping international debt markets, specifically issuing debt linked to rainforest preservation efforts – so-called green bonds.
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“We wanted to do it last year, but it was too early. This year I think some initiative will come out,” Kazadi said.