And it appears the government is focusing on the largest players first, following the announcement that a commission is now in place to investigate China Molybdenum Company’s (China Moly) stake in the massive Tenke Fungurume Mine (TFM) in the southern Lualaba province, the country’s largest cobalt and copper mine.
The key issue, according to Andre Wameso, Tshisekedi’s deputy chief of staff for economic and financial matters and a member of the commission, is whether the quantity of known reserves at TFM is consistent with what was stipulated in the contract.
“If the conditions have changed in terms of something that wasn’t there at the initial time, we must review the agreement on the basis of reality,” said Wameso.
The article continues below
Get your free PDF: Top 200 banks 2019
The race to transform
Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 200 banks from last year. Get your free PDF by completing the following form
But Wameso went out of his way in an interview with Bloomberg to provide assurances that these investigations should not be regarded as an “attack [on] foreign investors.”
What’s interesting about the timing of the investigation and the fact the government is starting with China Moly is that it comes just two weeks after the Chinese mining giant announced a $2.5bn investment in TFM with the goal of doubling copper and cobalt output. A representative for China Moly told Bloomberg that it has no comment about the commission or the investigation.
Four possible scenarios
With Tshisekedi’s push to renegotiate mining contracts, here are four likely outcomes:
- Justice: There’s a chance, albeit a small one if recent history is anything to go by, that the Tshisekedi administration is genuinely motivated by a sense of justice and the need to finally take action against foreign mining companies who’ve abused the DRC for centuries.
- Politics: More likely, President Tshisekedi and his allies are looking ahead to the 2023 presidential election and they’re going to want to show voters they took action against the foreign mining companies, Chinese firms in particular. If that’s the case, then this whole effort is largely theatre, given that Tshisekedi will need the support from the very Chinese mining interests that he’s now investigating. Modest changes to the contracts will be made, money will change hands and the president gets his talking point.
- Money: Equally likely, and consistent with recent Congolese actions in this realm, the commission and these investigations are nothing more than a high profile shakedown for the mining companies to pay up. The fact that it’s coming just as China Moly is investing $2.5bn in TFM is convenient. After all, the “signing bonus” from the Sicomines deal to former President Joseph Kabila and his allies was reported to be $350m. In a country that Transparency International ranks 170 out of 180, the role of corruption should never be discounted.
- Geopolitics: One other theory circulating is that the President is moving against Chinese mining companies at the behest of the United States, according to reporting by Africa Intelligence. While President Tshisekedi maintains strong ties with Washington, it’s unlikely that the US has that kind of leverage to compel him to target the Chinese mining companies who, after all, he is going to need to help finance his re-election campaign in the run-up to the 2023 vote.
Congolese politics is like a funhouse hall of mirrors where nothing is as it seems, especially when viewing from afar. With so many variables now in play, from electoral politics to geopolitics to outright corruption, it’s best to reserve judgment on what is actually going on until more information is available.
This article was first published in The China Africa Project.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options