Story headline reads: China’s infrastructure for minerals’ deal gets reality – check in DRC Congo.
When it was signed in 2007, the China’s $6-billion ‘minerals for infrastructure’ deal in Congo brought hopes of prosperity from export trade. But it did not happen.
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.
Sicomines was meant to have an immediate economic impact. The government claims that the China deal has produced at least $800-million in infrastructure investment. But that is way below the potential.
CHINA AID as Cash for resources
Chinese firms Sinohydro Corp and China Railway Group Limited are building roads and hospitals in exchange for a 68% stake in the Sicomines copper and cobalt mine…
China’s state-run Exim Bank and smaller Chinese banks are coughing up a reported $3-billion for infrastructure plus a further $3-billion to develop Sicomines.
LOANS — not grants
All of the loans are to be repaid with mining profits. HOWEVER, production from the mine has been delayed and targets scaled back. …”the project has underscored the deterrents to investment, from crippling power shortages to asphyxiating bureaucracy and corruption” says Johanna Malm, a researcher at Roskilde University in Denmark and expert on the contract.
The DRC Congo is an impoverished country that ranks 184th of 189 countries on the World Bank’s “Ease of doing business” index, and second from bottom in the UN Human Development Index. The southeastern province of Katanga is the focus of the copper industry. It receives only about half the electric power it needs from the national grid. Therefore, the mine companies need to generate their own power.
Economic cost of the BLOWN OPPORTUNITY
In 2013, the Africa Progress Panel reported that Congo had missed out on at least $1.36-billion in revenues between 2010 and 2012 by selling state mining assets below their value. Add to that the revenue lost because they could not produce and export as planned. Seems to be the definition of an emerging nation curse. ————–
For the full story as written by the author, go to: http://www.miningweekly.com/article/chinas-infrastructure-for-minerals-deal-gets-reality-check-in-drc-2015-07-08