An investment accord to the tune of $9 billion was signed last year between China and the Democratic Republic of Congo. The accord is under threat from the IMF, which wants it changed or else debt relief measures would be withheld. However, China has refused to comply and is proceeding with its side of the accord.
As part of the deal, China has been able to get rights over deposits of 600,000 tons of cobalt and 10 million tons of copper through its state owned companies China Railway Engineering Corporation and Sinohydro Corp. In turn, China will help develop the infrastructure of the country like wide roads, railways, schools, hospitals and universities, the cost of which would equal $6 billion. Another $3 billion would be used for mining purposes. Mining forms 14% of the Republic’s total economic output, and the industry is facing a difficult time due to the decline in the demand for metals from its old buyers in the western nations, which are reeling under the recession themselves. The entire deal is being funded by the Export-Import Bank of China, which has accepted the risk involved in a deal of this size.
The IMF coming in the way of the accord between China and the Republic of Congo is seen as the first attempt by the international organization to influence the pattern of Chinese investments in the African continent. It has threatened to withhold the aid that was to accrue to Congo equaling $10 billion in debt relief besides $500 million in financial support, if the accord is not modified. The loser in the whole affair is the people of Congo who have had to live through two civil wars between 1996 and 2003. The economic growth of Congo has slowed down anyway in response to the global economic downturn. It is likely to be in the range of 2.7% in the current year in contrast to 6% last year. It is burdened with interest payments on debts incurred previously and desperately needs all the support provided by China. Sinohydro and CREC have invested millions already in their mining projects.
Source : Chinafrica