Civil society organizations are criticizing the DRC’s updated mining deal with China for being financially unfavorable, potentially leading to significant losses. They emphasize the deal’s reliance on fluctuating copper prices and a fixed payment structure that does not benefit the DRC as production increases. Calls for renegotiation highlight ongoing concerns about transparency and the value derived from Chinese investment.
The Democratic Republic of Congo’s (DRC) revised mining agreement with a Chinese consortium is facing criticism from civil society organizations for financial losses and lack of transparency. These groups claim that despite updates made to what is termed the “contract of the century,” the terms remain unfavorable to the Congolese, potentially resulting in losses of $132 million (€124 million) in 2024 alone. They are calling for the government to renegotiate for a fairer deal.
The original contract, signed in 2008, allowed Chinese companies to access significant copper and cobalt mines in return for infrastructure development. The renegotiated terms aimed to generate nearly $4 billion (€3.8 billion) in benefits for the DRC, but advocacy groups argue that they do not corrected prior contractual disadvantages. The DRC’s dependency on fluctuating copper prices for infrastructure funding is a major concern, with annual payments of $324 million (€312 million) guaranteed only if prices exceed $8,000 (€7,700) per tonne.
CNPAV raises issues regarding the fixed payment structure established by the agreement, pointing to inconsistencies in profit sharing based on mineral output. Baby Matabishi from the Carter Center-DRC noted that fixed payments remain unchanged regardless of production levels. The current arrangement does not allow for increased income when production expands, reflecting a critical lack of scaling mechanisms.
Furthermore, tax exemptions for Chinese companies are costing the DRC an estimated $100 million annually. While the government asserts that infrastructure projects will compensate for these losses, NGOs stress that many related projects remain incomplete or below standard, complicating the development benefits promised by the deal.
The DRC’s mining contract revision with China has sparked significant civil society backlash, highlighting potential financial losses and a lack of equitable terms. Key issues such as dependence on copper price volatility, a fixed payment structure, and significant tax exemptions for Chinese companies raise important questions about the fair distribution of resources and the efficacy of promised infrastructure benefits. Advocates are calling for further negotiations to establish a more balanced agreement.
Original Source: allafrica.com
