February 13, 2008 / 12:45 PM / in 11 years

INTERVIEW-China eyes more investments in mineral-rich Congo

KINSHASA, Feb 13 (Reuters) - China, stepping up its investment drive in Africa, plans to pursue new infrastructure deals in Congo following last month’s signing of a multi-billion dollar accord giving Chinese companies major mining rights.

China’s ambassador to Democratic Republic of Congo said the Jan. 28 loan deal for huge infrastructure projects in transport and mining — with a value of at least $5 billion when it was first announced last year — could be just the start.

“I am encouraging other Chinese banks and companies to come and work within the same schema, exploiting other mines and other public works,” Ambassador Wu Zexian told Reuters in an interview in Kinshasa late on Tuesday.

He saw China expanding its interests in Congo by pursuing other possible major projects, such as involvement in the Grand Inga hydropower expansion scheme, whose backers say it will provide electricity to much of Africa.

“There is the MIBA (Congo diamond parastatal) or other mining companies or a deep water port, or the Grand Inga. All of these are things to carry out in the future,” Zexian said.

Under last month’s accord, Exim Bank of China pledged financing for major road and rail construction projects in Congo and for the rehabilitation of its strategic mining sector. Infrastructure in the mineral-rich former Belgian colony has been ravaged by years of conflict, corruption and neglect.

In return, China’s Sinohydro Corp and China Railway Engineering Corp received a 68 percent stake in a joint venture with Congolese state copper miner Gecamines, with rights to two large copper and cobalt concessions.

From Sudan to Angola and South Africa, China has been pumping billions of dollars of loans, investments and aid into Africa in the last two years, looking to lock up oil and mineral supplies for its hungry, fast-growing economy.

African governments generally welcome China’s investments as coming unfettered by Western demands for good governance and transparency. Some analysts are already portraying the Chinese as Africa’s “new colonialists” as they scramble for the rich resources coveted in the past by European powers.

Chinese experts were due to arrive in Democratic Republic of Congo in the second half of February to carry out feasibility studies aimed at determining the exact cost of the first wave of Chinese-financed infrastructure projects.

“COUNTRY IN NEED OF EVERYTHING”

Zexian said it would be several years before the Mashamba and Dikuluwe mining concessions allocated to China, with an estimated 10 million tonnes of copper reserves and 2 million tonnes of cobalt, would begin production.

“But that does not mean that the public works projects have to wait ... The idea is for the operation to start simultaneously,” he said.

Loans will cover the initial Chinese investment in the projects. Revenues from Sicomines, the new joint venture created with Gecamines, would repay them and fund future projects throughout the 30-year lifespan of the project partnership.

Congo is still recovering from a devastating 1998-2003 war and decades of corruption and mismanagement under the late dictator Mobutu Sese Seko. President Joseph Kabila’s government sees mining as the cornerstone of reconstruction.

However, the new partnership with Chinese investors has already spawned controversy.

The awarding to the Chinese companies of the Mashamba and Dikuluwe mines, concessions previously belonging to Toronto-listed Katanga Mining Limited (KAT.TO), has left many foreign companies wary of the expanding Chinese influence.

The International Monetary Fund has also warned Congo to beware of the macroeconomic impact of huge Chinese loans on a country already struggling under the weight of foreign debt.

Seeking to dispel these fears, Zexian said Chinese deals would be “win-win” partnerships that would develop Congo’s mining capacity while spurring economic development.

“This is a country in need of everything,” he said.

Zexian rejected criticism from mining watchdog groups that the Chinese loan deal lacks transparency. He said Congo chose to work with China because it offered the best conditions.

“They are very, very, favourable conditions. Unbeatable, one could say. Unbeatable by far. There won’t be any competitors.” (Editing by Pascal Fletcher and Giles Elgood)

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