- The mining sector in the DRC is dominated by Chinese firms, which export 80% of the country's mining exports to China, and up to 80% of all copper and cobalt mining in the DRC goes to China.
- The contract called for the construction of infrastructure, hospitals, and bridges, but China has yet to construct a single meter of rail in the DRC.
The Democratic Republic of the Congo (DRC) has begun a comprehensive assessment of mining contracts handed to a Chinese corporation it co-owns with Beijing, whose work and earnings have been the source of ongoing government worries about justice.
Authorities said they want to strike an agreeable settlement to ensure greater revenue for DRC while preserving Beijing's enterprises in order to end years of distrust with Chinese businessmen engaged. It hasn't worked out.
The DRC's Finance Minister, Nicolas Kazadi, stated that the contracts are skewed toward the Chinese on all fronts, vowing Kinshasa will make up for any errors in tax responsibilities, which it claims were overly lenient on the Chinese. “Sicomines SA does not want to pay the $200 million it is being asked to pay, after making super-profit,” the minister commented.
"They have to pay because it is so clear that this tax is not one of the taxes exempted in the contract," he added, referring to a firm formed to carry out the deal inked in 2008.
Thus far, it has been a difficult balancing act, with negotiations between Kinshasa and Beijing frequently escalating into new public squabbles, with China claiming to safeguard the rights of its corporate citizens.
The mining sector in the Democratic Republic of the Congo represents the might of Chinese economic interests: 80% of the country's mining exports are bound for China, with Chinese firms now nearly monopolizing the scene as the destination for up to 80% of all copper and cobalt mine in the DRC. According to the country's mining ministry, 90% of the DRC's mining output is sold to China.
According to the Inspectorate General of Finance report issued in February, Chinese corporations have already cashed in on at least $10 billion in contracts over the previous decade, while Kinshasa has profited from just $822 million in infrastructure.
This contract, in particular, provides for an exemption or a restricted set of terms on all direct or indirect, domestic or import and export taxes, charges, fees, and customs payable in the DRC.
President Tshisekedi has frequently stated that investors benefit from the investment reform framework since his election.
This decision to conduct a contract assessment was reached during contentious discussions between President Felix Tshisekedi's DRC administration and the Chinese Embassy in Kinshasa.
The sides decided to examine the 2008 deal signed between the DRC and Chinese enterprises for the growth of the mining industry as well as the construction of infrastructure, hospitals, and bridges.
The contract, known locally as the "contract of the century," was initially valued at $9 billion, and the DRC and China met at the time the IMF was opposed to the transaction due to potential debt. The deal was lowered to $6.5 billion after intense IMF pressure.
DRC required infrastructure but lacked funds. China had the money, but it lacked the minerals. China has yet to construct a single meter of rail in the DRC. Part of the agreement called for China to construct 3,500 kilometers of roads, 3,500 kilometers of the railway infrastructure, and 31 hospitals with 150 beds and 145 health centers.