April 3, 2019 - It was confidently billed at the time as the “deal of the century”. The Sino Congolaise des Mines (Sicomines) was the most significant Chinese investment project in Africa when it was agreed in 2007.The infrastructure agreement gave Chinese partners mining rights to cobalt and copper in the Democratic Republic of Congo (DRC). These minerals are used in electric vehicle batteries and electronics, including smartphones and laptops. In exchange, China agreed to build much-needed infrastructure projects such as urban roads, highways and hospitals.In addition to new infrastructure, the Sicomines deal was expected to provide a significant boost to the DRC’s economic growth. The view was that the agreed volumes of mineral production would contribute to higher levels of exports, tax revenue and inflow of US dollars.More than a decade on, the Sicomines deal has not lived up to expectations. There have been infrastructure project delays as well as unexpected costs. There have also been problems associated with poor quality roads and infrastructure and inadequate environment and social impact studies.  On the economic front, mineral exports from the DRC have indeed risen steeply. But sharp cyclical fluctuations show that the country is heavily reliant on both the Chinese market and the price of a few minerals. In addition, the Sicomines deal won exemption from taxes until infrastructure and mining loans were fully repaid. This means that the DRC will not receive any substantial income from the agreement in the foreseeable future.The Sicomines agreement demonstrates one of the main problems with deals of this nature. It never included any guarantee of the actual value that the Congolese population would get in exchange for the country’s main source of wealth.As we argue in a recent International Affairs article, the Sicomines deal provides lessons for other African countries. Future deals like this present an opportunity to change the model followed in Sicomines and by most Sino-African trade relations. This has, to date, essentially involved China supplying value-added manufactured goods and high-skilled workers. In exchange, African countries have agreed to export mainly primary-based resource products. And African workers are hired for unskilled, low-cost tasks.It needn’t be this way.Protecting the host country’s interestsThe first decade of the deal shows that Chinese companies have focused their efforts on benefiting from access to valuable natural resources. But the interests of local communities have been neglected.In addition, several of the problems affecting the building of infrastructure have arisen because quality control responsibility was assigned to the same two Chinese companies responsible for execution. These were China Railway Engineering Company and Sinohydro, a large state-owned hydropower and engineering company.This highlights the potential trap of these deals. The level of contribution to development depends, to a great extent, on the ability of inexpert local institutions to manage complex multilateral projects.There is a solution to this. Host countries should create committees of experts, if necessary with regional and international support. Alternatively, they could contract independent specialised consultants to guarantee that national interests are satisfied.Instead of negotiating with a unique consortium of companies, these teams would participate in the development of a public procurement process to award the project to the most competitive bidder. Additionally, the committees would be in charge of monitoring implementation of the contract. This could include extraction works, quality of infrastructure, compliance with environmental and social standards.  https://theconversation.com/the-drc-and-chinas-sicomines-why-future-deals-should-be-different-114571

May 22, 2015 - The DRC’s first ‘infrastructure for minerals’ partnership project, entailing the delivery of two new copper plants in Katanga, will start production towards the end of the year.  The project belongs to and is overseen by Sicomines Sarl, a joint venture between Congolese mining company Gecamines SA, China‘s Sinohydro and the China Railway Group.  The plants’ initial copper output is 50 000 t annually, gradually rising to an expected 400 000 t over the next two decades.  The Sicomines plants represent a critical development and capacity-building endeavor for the DRC, employing 3 000 workers, 70% of whom will be Congolese. In addition, the joint venture will disburse approximately $3 billion for the construction of roads, dams, hospitals and schools, including infrastructure projects such as the Busanga hydroelectric project.  “The progress made by the Sicomines partnership reinforces the DRC’s commitment to strengthening and professionalising its mining sector, and will help increase accountability in the industry,” says Moïse Ekanga Lushyma, executive secretary of the Bureau de Coordination et du Suivi du Programme Sino-Congolais (BCDPSC).  “We are looking forward to initialising production in just a few months, and this project will have positive effects for both the Congolese people and the DRC’s mining and business sectors. This mutually beneficial cooperation with our Chinese partners is a strong example for others interested in investment opportunities in the DRC.”  “When Sicomines builds a plant in the DRC, it sources equipment globally and is a job creator in China, the U.S., France; it creates tax revenues for the DRC, employs local labor and the shared experience facilitates the knowledge transfer we need. Sicomines is the real proof of concept for us that we have sought under the leadership of President Kabila and will continue to replicate with other investors.”  “In partnership with the World Bank and the IMF, the DRC has implemented liberalising reforms designed to increase business activities and create jobs across the country, including reforms in key industrial and commercial sectors. Our nation’s infrastructure is being rebuilt at an unprecedented rate, with new roads, schools, and hospitals under construction. Tangible investments like Sicomines from international partners will help solidify these gains and foster broader regional stabilisation and growth”.  Between 16 and 17 May, members of the World Bank, United Nations Development Programme, the U.S Embassy and other foreign diplomats toured facilities and assessed the progress of the new copper plants.