[Sino-Congolese Programme] China Eximbank provides $3.003 billion buyer's credit loan for multiple infrastructure projects (Linked to Record ID#73145, #73204, #91873, #100887, #100888, and #91875)

[Sino-Congolese Programme] China Eximbank provides $3.003 billion buyer's credit loan for multiple infrastructure projects On September 17, 2007, a consortium consisting of China Eximbank, China Railways Construction Company (CREC), and Sinohydro and the Government of the Democratic Republic of Congo signed a “protocol d’accord” (or “项目换资源协议”).

According to the terms of the agreement, CREC and Sinohydro would be granted a 68% equity stake in a new joint venture (JV) named the Sino–Congolais des Mines (Sicomines SARL), and a Congolese parastatal called Générale des Carrières et des Mine SARL (Gécamines SARL) would own the other 32%.

In exchange, the CREC and Sinohydro would provide the Government of the DRC with turnkey public infrastructure projects (worth $6.56 billion) financed by China Eximbank.

The terms of lending were not identified in the “protocol d’accord." Then, on April 22, 2008, a “convention de collaboration” (Chinese name: 关于刚果民主共和国矿业开发和基础设施建设的合作协议) was signed by the Government of the DRC and Sinohydro (on behalf of Sicomines).

Principal repayments were not scheduled to commence until 2018, which implies a grace period of 10-years.

The proceeds from these loans would be disbursed to the Chinese contractors responsible for individual infrastructure projects.

The April 2008 agreement also specified the ownership structure of the Sicomines joint venture: CREC would hold a 43% equity stake in the joint venture, while Sinohydro would hold a 25% equity stake, Gécamines would hold a 20% equity stake, and Mr. Gilbert Kalam Babanika (who was eventually appointed as deputy head of Sicomines) would hold a 12% equity stake.

On June 28, 2008, an amendment to the agreement was signed, which changed the ownership structure of the joint venture, such that CREC was given a 28% equity stake, Sinohydro was given a 20% equity stake, China Metallurgical Group Corporation was given a 20% equity stake, Gécamines was given a 20% equity stake, and Mr.

Gilbert Kalam Babanika was given a 12% equity stake.

On September 11, 2008, a second amendment was signed, which further changed the ownership structure of the joint venture, with CREC holding a 33% equity stake, Sinohydro holding a 30% equity stake, Zhejiang Huayou Cobalt holding a 5% equity stake, Gécamines holding a 20% equity stake, and Mr. Gilbert Kalam Babanika holding a 12% equity stake.

Additionally, as part of the April 22, 2008 “convention de collaboration,” the consortium of Chinese companies reportedly agreed to provide $2.982 billion via (1) a $32 million loan to Gécamines to cover its initial capital injection to Sicomines (the total registered capital of Sicomines in 2008 was $100 million); (2) a $50 million loan to Gécamines to procure supplies; (3) a $870.1 million, interest-free shareholder loan (prêt d’actionnaire) a shareholder loan for the development of the copper and cobalt mine at Kolwezi; and (4) and a $2.0299 billion loan from China Eximbank (with a fixed interest rate of 6.1% and a 25-year maturity) for the development of the copper and cobalt mine at Kolwezi.

Ultimately, however, it provided financial commitments worth $3.28 billion through (1) a $1.07 billion interest-free shareholder loan (prêt d’actionnaire) from China Railway Engineering Corporation (CREC), Sinohydro Corporation and Zhejiang Huayou Cobalt to Sicomines SARL; (2) a $2.13 billion (buyer's credit) loan from China Eximbank (with a fixed interest rate of 6.1% and a 25-year maturity) to Sicomines SARL; (3) a $50 million loan from Sicomines SARL to Gécamines; and (4) a $32 million loan from Sicomines SARL to Gécamines.

Record ID#73204, Record ID#100887, and Record ID#100888 capture the respective contributions of China Railway Engineering Corporation (CREC), Sinohydro Corporation and Zhejiang Huayou Cobalt to the $1.07 billion interest-free shareholder loan. Record ID#73145 captures the $2.13 billion loan from China Eximbank.

The $50 million loan from Sicomines SARL to Gécamines is captured via Record ID#91873. The $32 million loan from Sicomines SARL to Gécamines is captured via Record ID#91875.

The Congolese government initially agreed to provide a sovereign guarantee for both the "infrastructure loan" and the "mining loan" from China Eximbank.

Another unique feature of the April 22, 2008 agreement was the inclusion of a $350 million signing bonus from the consortium of Chinese firms.

However, following pressure from the IMF and civil society, an amendment (Avenant No. 3 à la Convention de Collaboration Relative au Developpement d’un Projet Minier et d’un Projet d’Infrastructures en République Démocratique du Congo du 22 Avril 2008) was made to the “convention de collaboration” in October 2009.

It reduced the size of the infrastructure loan from $6 billion to $3,003,830,000 and reportedly removed the sovereign guarantee for the copper and cobalt mining loan from China Eximbank, while leaving the sovereign guarantee (that can only be called after 2050) for the infrastructure loan in place.

China Eximbank was not a party to this amended agreement, which specified that if the floating (market) interest rate on the infrastructure loan (LIBOR plus 100 basis points) rose higher than the rate (4.4%) referenced in the April 22, 2008 “convention de collaboration," an expanded consortium of Chinese firms (CREC, Sinohydro, and Zhejiang Huayou Cobalt Company Ltd) would assume responsibility for the additional interest payments.

The profits from the investment by SICOMINES SARL in the copper and cobalt mine at Kolwezi were to be used to repay the loans that financed the costs of developing the copper and cobalt mine and the unrelated infrastructure projects.

However, nearly four years after the October 2009 amendment was signed, the Congolese parliament had still not ratified it and China Eximbank became concerned about the risk of non-repayment.

In order to limit its risk exposure, China Eximbank suggested that it take over Gécamines’ 32 percent ownership stake and that the Chinese consortium’s 68 percent ownership stake be mortgaged until the infrastructure and mining loans were repaid.

The Congolese government rejected these proposed changes, and China Eximbank responded by halting disbursements in early 2012. Then, the Chinese firms began negotiating with two alternative financiers: China Development Bank and Bank of China.

In July 2013, China Eximbank reversed its decision to halt funding for development of a copper and cobalt mine in Kolwezi.

China Eximbank and Sicomines SARL signed an additional loan agreement [contract identification number: 1410101062013211511] worth $2,610,000,000 in 2013 to increase production capacity at the copper and cobalt mine in Kolwezi. The loan carried an interest rate of 12-month LIBOR plus a 3% margin (rather than 6-month LIBOR plus a 1% margin).

However, its other borrowing terms (maturity, grace period, fees) are unknown.

On April 8, 2017, shortly before Congolese President Joseph Kabila left power, a fourth amendment to the “convention de collaboration” was signed (Avenant No. 4 à la Convention de Collaboration Relative au Developpement d’un Projet Minier et d’un Projet d’Infrastructures en République Démocratique du Congo).

It was reportedly negotiated in secret and without the knowledge of the Congolese Ministry of Mines.

It exempted Sicomines SARL from paying customs and taxes and effectively allowed for the payment of dividends to the shareholders of Sicomines SARL before loan repayments were made to its external creditors.

Then, in 2020, Sicomines SARL signed a pre-financing agreement (also known as a pre-export finance facility, PXF, or commodity prepayment facility agreement) worth $1,771,048,731.89 with its Chinese state-owned shareholders (CREC, Sinohydro, and Zhejiang Huayou Cobalt Co., Ltd). The loan carries an interest rate of 6-month LIBOR plus a 2.7% margin.

Its other borrowing terms (maturity, grace period, fees) upon which Sicomines SARL borrowed are unknown.

However, it is known that the borrower was responsible for securing and repaying these debts (including principal and interest) via mineral export receipts.

It is also known that the borrower failed to make scheduled principal and interest repayments worth $16,876,728.33 during calendar year 2021 and the loan's principal amount outstanding was $816,260,535.91 as of December 31, 2020 and $833,137,264.24 as of December 31, 2021.

In December 2021, the DRC’s EITI multi-stakeholder group (ITIE-RDC) published an evaluation of the Sicomines agreement.

It concluded that the agreement presented "an unprecedented harm in the history of the DRC." It claimed that a biased feasibility study was used as a basis for the investment decision, copper reserves were undervalued, many infrastructure projects remained incomplete, and the fourth amendment to the “convention de collaboration” diverted profits to shareholders rather repaying lenders on a first-priority basis.

Months before the December 2021 publication of the ITIE-RDC report, Congolese President Félix Tshisekedi expressed a desire to renegotiate unbalanced contracts in favor of “win-win deals." Prompted by public debate surrounding the Sicomines project and ITIE-RDC’s findings, he instructed his government -- including a government auditor called the Inspection Generale des Finances (IGF) – to investigate the 2008 “convention de collaboration” and its corresponding amendments.

He also disbanded the BCPSC and replaced it with an entity called APCSC (Agence de pilotage, de coordination et de suivi des conventions de collaboration signées entre la République démocratique du Congo et les partenaires privés).

The findings of ITIE-RDC evaluation were later corroborated by an IGF audit, which provided a basis for the Congolese Government to renegotiate the “convention de collaboration” with CREC, Sinohydro Corporation and Zhejiang Huayou Cobalt.

A February 2023 IGF audit claimed that CREC, Sinohydro Corporation and Zhejiang Huayou Cobalt had earned approximately $10 billion in profit, while the Congolese Government received loan disbursements worth less than $900 million for infrastructure projects.

It also admonished Sicomines SARL for contracting the $1,771,048,731.89 pre-financing (PxF) facility in 2020, calling it an opaque form of borrowing and a violation of the DRC’s Foreign Exchange Regulations and Mine Regulations. Then, in May 2023, Tshisekedi traveled to China to discuss the future of the Sicomines agreement.

In January 2024, Tshisekedi was sworn in after a winning second five-year presidential term following a landslide electoral victory in December 2023.

When he took the oath of office on before a packed crowd at Kinshasa's iconic Stade des Martyrs, he announced that billions of dollars would soon be available thanks to a renegotiation of the controversial Sicomines deal.

Without providing further details, he announced “the upcoming allocation of funds from the envelope obtained as part of the renegotiation of the Sicomines project [...] which should reach a total amount of $7 billion." Then, on March 14, 2024, a fifth amendment to the “convention de collaboration” (Avenant No. 5 à la Convention de Collaboration Relative au Developpement d’un Projet Minier et d’un Projet d’Infrastructures en République Démocratique du Congo du 22 Avril 2008) was signed.

Under the terms of the fifth amendment, Gécamines is entitled to receive royalty payments worth 1.2% of all copper and cobalt sales and market 32% of extracted minerals, while the Chinese owners of Sicomines SARL are entitled to sell the remaining 68% of extracted minerals.

The fifth amendment also authorizes Sicomines SARL to access $5,808,000,000 in additional grant and loan financing for infrastructure projects over a seventeen-year period (2024-2040) -- including a $300,000,000 government-guaranteed borrowing in 2024 and $324,00,000 annual grants between 2024 and 2040 -- so long as the international price of copper is equal to or greater than $8,000 per ton.

The fifth amendment to the “convention de collaboration” also specifies that the annual grant amount will be adjusted linearly, downward to zero if the international price of copper falls to $5,2000 per ton, and upwards by 30% if the international price of copper rises to $12,000 per ton.

Construction of the copper and cobalt mine in Kolwezi began in April 2013 and the first phase of the mining project was completed on November 6, 2015. The first phase of the mining project achieved full-capacity production and became profitable in April 2016. The second phase commenced at some point between August 2019 and May 21, 2020.

Upon completion of the project’s second phase, the mine’s annual copper output is expected to reach 250,000 metric tons (if it runs at full capacity).

By 2022, the mine's annual copper output exceeded 200,000 metric tons and it was expected to reach 300,000 metric tons per year after 2028.

According to the Sino-Congolese Program Coordination and Monitoring Office (BCPSC), by the end of 2020, the $2.13 billion China Eximbank mining loan had achieved a 98% disbursement rate ($2,088,350,000 out of $2,130,000,000).

In total, the loan disbursed $175 million in 2009, $265.3 million in 2010, $7.93 million in 2011, $190.65 million in 2012, $208.91 million in 2013, $526.2 million in 2014, $154.68 million in 2015, $18.74 million in 2016, $11.26 million in 2017, $6.8 million in 2018, $45.76 million in 2019, and $477.11 million in 2020.

According to BCPSC, Sicomines SARL made debt service payments (worth $550.14 million) on the $2.13 billion China Eximbank mining loan between 2009 and 2020: $8.28 million in 2009, $19.997 million in 2010, $20.49 million in 2011, $7.22 million in 2012, $25.31 million in 2013, $54.31 million in 2014, $68.96 million in 2015, $72.28 million in 2016, $69.61 million in 2017, $66.11 million in 2018, $62.7 million in 2019, and $74.4 million in 2020.

BCPSC also reported in 2020 that Sicomines SARL was scheduled to make the following debt service payments on the China Eximbank mining loan between 2021 and 2025: $106.8 million in 2021, $106.8 million in 2022, $106.8 million in 2023, $106.8 million in 2024, and $82.8 million in 2025.

The total amount outstanding under the $2.13 billion China Eximbank mining loan was $1,702,814,509 as of December 31, 2020 and $2,088,350,000 as of December 31, 2021.

According to the Direction Générale de la Dette Publique (DGDP) within the Congolese Ministry of Finance, the borrower made principal payments under the $1,070,000,000 interest-free shareholder loan agreement worth $0 during calendar year 2020 and $148,977,360.00 during calendar year 2021.

The loan's principal amount outstanding was $487,872,271.91 as of December 31, 2019, $739,350,671,91 as of December 31, 2020, and $590,373,311.91 as of December 31, 2021.

According to the Direction Générale de la Dette Publique (DGDP) within the Congolese Ministry of Finance and Sicomines SARL, the borrower made principal and interest payments to China Eximbank under the $2,610,000,000 loan agreement worth $261,428,542.23 during calendar year 2018, an unknown amount during calendar year 2019, $275 million during calendar year 2020, and $267 million during calendar year 2021.

However, it also failed to make scheduled principal and/or interest payments worth $22,651,931.70 during calendar year 2021.

The loan's principal amount outstanding was $1,878,696,921.85 as of December 31, 2017, $1,610,337,708.68 as of December 31, 2019, $1,354,761,750.61 as of December 31, 2020 and $1,110,413,682.31 as of December 31, 2021.

The first phase/tranche of the $3,003,830,000 China Eximbank infrastructure loan was reportedly capped at $1.053 billion until the start of the second phase/tranche, while the balance of the remaining balance of the $3,003,830,000 loan was to be made available for additional infrastructure projects.

By the end of 2020, BCPSC reported that the $3,003,830,000 China Eximbank infrastructure loan had loan disbursed $825,126,455.22 in support of 43 infrastructure projects between 2009 and 2020.

By the end of 2022, the IMF reported that the $3,003,830,000 China Eximbank infrastructure loan had loan disbursed $888 million.

According to BCPSC, Sicomines SARL made debt service payments (worth $441.1 million) on the China Eximbank infrastructure loan between 2009 and 2020: $3.6 million in 2009, $4.8 million in 2010, $5.8 million in 2011, $7.9 million in 2012, $6.9 million in 2013, $6.4 million in 2014, $7.8 million in 2015, $12.1 million in 2016, $16.8 million in 2017, $102 million in 2018, $102 million in 2019, and $165 million in 2020.

BCPSC also reported in 2020 that Sicomines was scheduled to make the following debt service payments to China Eximbank between 2021 and 2025: $160.2 million in 2021, $160.2 million in 2022, $160.2 million in 2023, $124.2 million in 2024, and $0 in 2025.

The total amount outstanding under the $3,003,830,000 China Eximbank infrastructure loan was $658.78 million as of December 31, 2021. By March 2017, 36 infrastructure projects had reportedly been approved through the China Eximbank infrastructure loan. By the end of 2020, at least 43 infrastructure projects worth $825,126,455.22 had been approved through this loan.

In the listing of subsidiary loan commitments and loan pledges for individual infrastructure projects that is provided below, AidData has organized these projects into four time periods: 2008-2014, 2015-2017, 2018, and 2023. 2008-2014 1. Refurbishment of 5.3 km of Boulevard du 30 juin, Kinshasa (#59427) 2.

Refurbishment of 2.5 km of Boulevard du 30 juin, Kinshasa (#59429) 3. 0.5km Central Station Loop Project, Kinshasa (#85286) 4. Refurbishment of 6.8 km of Avenue du Tourisme, Kinshasa (#59431) 5. Modernization of Boulevards Triomphale et Sendwe, Kinshasa (#59654) 6. Refurbishment of Lutendele road, Kinshasa (#59437) 7.

Refurbishment of 66 km of Beni-Niania road, North Kivu (#59439) 8. Refurbishment of Esplanade of the People's Palace, Kinshasa (#59430) 9. Asphalting of national road between Lubumbashi and Kasomeno, Katanga province (#59444) 10. Grading of the national road between Lubumbashi and Kasomeno, Katanga province (#59441) 11.

Factory to build prefabricated houses, Kisangani (#59226) 12. Construction of 50th anniversary hospital with 450 beds (#59478) 13. Construction of traversée ville de Butembo (#59198) 14.

Phase 1 of the Bukavu-Nyangezi-Kamanyola-Uvira Segment of Route Nationale 5 (RN5) Construction and Modernization Project (#46231) 15.

Phase 2 of the Bukavu-Nyangezi-Kamanyola-Uvira Segment of Route Nationale 5 (RN5) Construction and Modernization Project (#85310) 16. 6626 Solar Street Lights Acquisition Project (#92027) 17. Survey Coverage of Artisanal Mining Areas in Kolwezi Project (#92059) 2015-2017 1. Refurbishment of Boulevards Triomphale et Sendwe, Kinshasa (#59432) 2.

Modernization of L'avenue Nzolana Phase 1 (#59229) 3. Modernization of L'avenue Nzolana Phase 2 (#59235) 4. Rehabilitation of Kikwit-Idiofa Road (70km) [also known as Ingudi-Idiofa Road] (#59227) 5. Phase 1 of Mbuji Mayi-Mwene Ditu Paved Road Rehabilitation Project (#59244) 6. Rehabilitation and Modernization of Kolwezi Road (#59205) 7.

Modernization of the Kisangani Road (#59216) 8. Construction of Bunia Stadium (#59208) 9. Construction of Goma stadium (#59211) 10. Rehabilitation of 100km Bunagana-Rutshuru-Goma Road (#59210) 11. Phase 1 of Bukavu Stadium Construction Project (#59212) 12. Phase I of Uvira Road Rehabilitation and Modernization Project (#46235) 13.

Phase II of Uvira Road Rehabilitation and Modernization Project (#85285) 14. Rehabilitation of Lwambo-Mitwaba-Manono-Kalemie Road Phase 1 (#59228) 15. Rehabilitation of Lwambo-Mitwaba-Manono-Kalemie Road Phase 2 (#59245) 16. Rehabilitation of road Kitanda-Ankoro (70km) (#59224) 17. Rehabilitation of road Ankoro-Manono (115km) (#59243) 18.

Solar Street Light Acquisition and Installation Project (#59217) 19. Rehabilitation of the Kalemie Road (Phase I) (#59214) 20. Rehabilitation of the Kalemie Road (Phase II) (#85273) 21. Phase 1 Construction of Kalemie Stadium (#59213) 22. Phase 2 Construction of Kalemie Stadium (#85274) 23. Construction of Kalemie airport terminal (#59220) 24.

Opening of road Kamina-Kabongo (230KM) (#59221) 25. Opening of road Kabondo-Dianda-Mukwende (350KM) (#59222) 26. Construction of metering and water treatment unit at Kamina (#59209) 27. Kabalo Bridge Construction and Modernization Project (#73205) 28. Modernization of Manono road network. Status: Implementation.

Cost: $5 million (#59223) 29. Construction of a ramp connecting Kalemie Stadium to Lumumba Boulevard (#85311) 30. Technical studies for Kalemie Road Rehabilitation and Modernization Project (#59530) 31. Technical studies for Bukavu Stadium Construction Project (#59533) 32. Technical studies for two bridges as part of the Kalemie Road Rehabilitation and Modernization Project (#59527) 33.

Technical studies for Uvira Road Rehabilitation and Modernization Project (#59524) 34. Technical studies for Goma Stadium rehabilitation (#59522) 35.

Construction of a bridge, health center, and vocational school in Sankuru Province (#87580) 2018 1. 12.934 km Kamina-Musonoï-Kapata Road Construction Project (#87018) 2023 1. Phase 2 of the Mbuji Mayi-Mwene Ditu Paved Road Rehabilitation Project (#108764) 2. Manterne-Tshela-Singini Road Rehabilitation Project (#108765) 3.

Phase 2 of the Bukavu Stadium Construction Project (#108766) 4. RN1 to Idiofa Section of National Road 20 (RN20) Rehabilitation Project (#108767) 5.

Phase 3 of the 55.5 km Bukavu-Nyangezi-Kamanyola-Uvira Segment of Route Nationale 5 (RN5) Construction and Modernization Project (#108768) 6. Avenue Kitutu Solar Lighting Supply and Installation Project (#108769) Unknown: 1. Rehabilitation of Komanda-Bunia-Mahagi Road (#59398) 2. Rehabilitation and modernization of l'Avenue de Paix (#59484) 3.

Electricity Generator Acquisition Project (#59443) 4. Rehabilitation and construction of l'Avenue Ndjoku (#59485) 5.

Kisangani International Airport Modernization Project (#59080) CSR Projects by Sicomines: Electric Power Public Welfare Project (#59721) Water supply system of Kabada Town (#52974)