DRC: When transparency in the renegotiation of mining contracts pays off

The recent $7 billion agreement between China and the Democratic Republic of Congo (DRC) signed in mid-March 2024 shines a light on the critical importance of transparency and openness in mining contracts. This move has garnered praise from the Extractive Industries Transparency Initiative (EITI), which notes that these measures have boosted the expected revenue from this partnership focusing on copper and cobalt exploitation by an impressive $4 billion.

Initially established in 2008, the agreement outlined a $3 billion investment in infrastructure across the DRC.

However, its disclosure triggered criticism from the Congolese civil society, particularly from the local EITI committee in the DRC.

In December 2021, a report by this committee highlighted an «unprecedented harm in the history of the DRC», pointing out the imbalance in the contract terms between the Congolese and Chinese parties.

The report revealed that essential infrastructure projects such as roads and hospitals, as promised in the initial agreement, had not been carried out.

Additionally, the valuation of the copper reserves on which the investment was based was found to be underestimated.

These findings were corroborated by a subsequent report from the General Inspectorate of Finance, underscoring that the DRC had received only $822 million since the agreement’s inception, while Chinese companies had profited nearly $10 billion.

In response to these revelations, criticisms, and public debates, Congolese authorities pressed for a renegotiation of the agreement.

It is worth noting that without the initial transparency and the subsequent criticisms, it is unlikely that the Congolese state would have entered into this new agreement with China, which resulted in an additional $4 billion.

These additional funds will be primarily directed towards the construction of nearly 5,000 kilometers of vital roads, crucial for the country’s development and connectivity.

This narrative highlights the transformative impact of transparency in mining contracts.

By shedding light on unfair terms, it paved the way for a reassessment of the original agreement, ultimately leading to a more beneficial outcome for the DRC.

It also underscores the vital importance of transparent and equitable governance in the natural resources sector to ensure that African nations truly reap the benefits of their resource wealth.