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DRC: Chinese Investments in Infrastructure Now Tied Copper Prices

Tuesday, 07 May 2024 19:38
DRC: Chinese Investments in Infrastructure Now Tied Copper Prices

(Ecofin Agency) - Kinshasa will receive $324 million annually for infrastructure projects until 2040, contingent on copper prices above $8,000 per ton. Should the price drop below this threshold, the funding will gradually decrease until it reaches $5,200 per ton.

Chinese investments in the Democratic Republic of the Congo (DRC) under the amended mega-mining contract signed in March 2024 will be tied to global copper price fluctuations. The DRC government made the statement in a report released on May 3 on its official website.

The original agreement, the "minerals for infrastructure" contract, was inked in 2008 with Beijing. Under that deal, Sinohydro Corporation and China Railway Engineering Corporation are to build infrastructure (roads, bridges, hospitals, clean water facilities, etc.) in the DRC between 2008 and 2040, for $3 billion. In exchange, they would obtain a 68% stake in the Sino-Congolese Mining Company (Sicomines), a joint venture that mines cobalt and copper in Congo.

Following recent negotiations, the investment amount has been raised to $7 billion to align with mining concessions' true value. So far, $1.5 billion has been disbursed.

The DRC will receive $324 million annually for infrastructure until 2040, provided copper prices remain above $8,000 per ton.

If copper sells for more than $12,000 per ton, 30% of additional profits will be allocated to new projects, while funding will decrease if prices fall below $8,000. Funding will cease if prices drop to $5,200 per ton.

Under the terms of the revised contract, the project benefits from a "total exemption from all indirect or direct taxes, duties, customs duties, and royalties until 2040".

The DRC is the world's leading producer of cobalt and one of the top three copper producers globally.



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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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