Chinas $5.5 billion
infrastructure-for-minerals deal for the Democratic Republic of
Congo (DRC) heralds a strategic expansion by Beijing of
financing to Africa and poses a challenge to traditional
lenders. The mining deal, announced this month and still being
finalized, offers a lifeline to President Joseph Kabilas
Although the World Bank and others have increased assistance to
the DRCs blighted economy since Kabilas 2006
election victory, the Chinese package is far larger than all
western aid combined over the next few years.
And a range of sources in Kinshasa told Emerging
Markets there was more to come from Beijing. It is
suggested that $19 billion of medium-term investment could be
on the way, involving several packages similar to the mining
deal all secured by natural resources.
A well-connected western diplomat said: The Chinese are
very discrete, but they are sharing some information with us.
We have been told this only the first of a number of deals. The
scale defies belief. So far, Chinese resource-backed
deals in Africa have been led by the Export-Import Bank of
China (China Eximbank). Now the mighty China Development Bank
(CDB) is joining in: it last week signed a cooperation
agreement with the Public Works Ministry in Kinshasa.
A DRC government move to re-examine natural resources contracts
may also be a welcome signal to China. western mining companies
told Emerging Markets that they are concerned that the
inspection could be a prelude to their expulsion from choice
concessions, to leverage the Chinese in. Congolese officials
complain that OECD countries have not been generous enough,
given the DRCs huge development needs. More than 80% of
the population live on less than $1 per day, and minerals are
flown out of Katanga and other landlocked producing areas
because the road and rail network has collapsed.
Roger Bossise Kataala, director of infrastructure at the
Ministry of Infrastructure and Public Works a key player
in the Chinese deals said: When a country comes
out of war it needs a Marshall plan, as Germany did and South
Korea did. But this hasnt really happened here.
Weve opened up to all partners but its only the
Chinese who have really responded. The $5.5 billion deal
announced this month involves the China Eximbank and
malfunctioning parastatal mining company, Gecamines.
Mines minister Martin Kabwelulu Labilo told Emerging
Markets: It is an inter-Chinese deal in that [China
Eximbank] will provide credits, half to go to the mines
development and half to the Ministry of Public Works to finance
projects. The mines will be developed by joint ventures,
and the dividend from those new companies will finance the
public works. ... This can work for others too. Weve only
started with the Chinese. Labilo insisted that the deal
with Gecamines involved only non-attributed
deposits, i.e. it would not affect western