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DRC: Tshisekedi to review ‘Chinese’ mining contracts, will allies agree?

By Dr. Roger-Claude Liwanga
Posted on Thursday, 24 June 2021 13:57

DRC’s President Félix Tshisekedi on 12 May 2021 in Kolwezi. DR / DRC Presidency

DRC’s President Félix Tshisekedi hopes to persuade foreign mining companies to review contracts that they finalised under Joseph Kabila. To win the upcoming battle, he will also have to convince his own political friends, most of whom are involved in joint ventures, that his approach is a valid one.

Between 2007 and 2008, under the DRC’s former president Joseph Kabila’s regime, Kinshasa and Beijing signed a very specific set of mining contracts, which are now referred to as the famous ‘Chinese contracts’. These were apparently simple barter contracts, where a group of Chinese companies – China Railway Group Limited and Sinohydro Corporation – undertook to build thousands of kilometres of road and rail infrastructure, as well as hundreds of health centres and hospitals, for a total of $6bn. In return, the DRC allowed these companies to mine a number of their copper, cobalt and gold reserves.

Promises that are slow to materialise

However, more than 10 years after these ‘Chinese contracts’ were signed and the start of mineral exploitation, the promised infrastructure has been slow to materialise. According to Kabila’s successor, the only way to resolve this ‘injustice’ is to renegotiate all mining contracts linking the DRC to foreign companies – whether European, Canadian, Indian or Chinese.

According to the DRC’s President Félix Tshisekedi, it is unacceptable that Congolese people who live in areas where copper, cobalt and gold ores are mined “are still languishing in misery”, while foreign multinationals are getting rich at their expense.

Tshisekedi is yet to make any official statement on the potential retaliatory measures he could take if the companies concerned refuse to renegotiate their contracts.

Some welcome this as a ‘patriotic’ initiative but others criticise it as a ‘prisoner’s dilemma’ strategy that Tshisekedi seems to want to use to make the mining companies comply. The ‘prisoner’s dilemma’, which mathematician Albert Tucker formulated in 1950, describes a situation in which two prisoners would benefit from working together but, due to lack of communication between them, they eventually decide to betray each other.

Basically, if both prisoners cooperate, the duo would receive a minimum sentence. If one confesses to the crime by betraying the other, the betrayer will be released, while the other, who has remained silent, will receive the maximum sentence. And finally, if the two betray each other, each will receive an intermediate sentence.

This tactic is also used in trade negotiations. For example, it is more or less what former US President Donald Trump used when he renegotiated the North American Free Trade Agreement with Canada and Mexico in 2018.

Severe retaliation

Within the context of mining contracts in the DRC, Tshisekedi has accused both the consortium of Chinese mining companies and the group of non-Chinese mining companies of enriching themselves at the expense of local populations. In this scenario, Tshisekedi would be the jailer, while the Chinese mining consortium and the non-Chinese mining group would be the prisoners.

These ‘prisoners’ – the consortium of Chinese companies and the group of European, Canadian and Indian companies – could agree to cooperate, i.e. agree to renegotiate the mining contracts to the benefit of all. However, if all of these mining companies do not concur, the Congolese president could take drastic measures against them.

So far, Tshisekedi has not yet made any official statement on the potential retaliatory measures he could take if the companies concerned refuse to renegotiate their contracts.

If the group of non-Chinese mining companies agrees to new contracts, then Chinese companies may have no choice but to do the same. This is the type of ‘win-win’ situation that Tshisekedi would prefer. If, in addition to the Indian companies, the Western companies were the only ones to agree to new terms, Tshisekedi could take more severe retaliatory measures against the Chinese.

Is the Union Sacrée convinced?

Some may say that the foreign mining companies involved have no reason to refuse to renegotiate certain aspects of their partnerships. This is all the more true since the collaboration agreement between the DRC and the group of Chinese companies provides for periodic and amicable discussions on the proper execution of their agreement.

It is also important to remember that, beyond simple legal issues, renegotiating mining contracts has a political dimension in the DRC. Indeed, almost all foreign mining companies operating in the DRC are set up as joint ventures with Congolese mining companies. And it is believed that some of the Congolese partners and co-owners of these companies are allies of the presidential camp within the Union Sacrée. The president has also acknowledged that some Congolese people were benefiting from these unfair contracts.

Hence the principal question is: Before publicly announcing that mining contracts would be renegotiated, did Tshisekedi try to convince his political allies to review the handsome mining agreements, from which they also benefit? What would happen if his allies do not support his initiative?

In any case, the multinational mining companies have every interest in cooperating with the Congolese government. Therefore, President Tshisekedi is not entirely powerless. If the amicable discussions fail, he can arbitrate, as authorised by the Convention de Collaboration between the DRC and the group of Chinese companies.

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