Chinese Government signs $20 billion resource-backed loan framework agreement (Linked to Record ID#65113)

Chinese Government signs $20 billion resource-backed loan framework agreement On September 5, 2017, the Chinese Government and the Republic of Guinea signed a $20 billion loan framework agreement, also called the Resource and Loan Cooperation Framework Agreement.

The purpose of this 20-year agreement (2017-2036) is to finance infrastructure projects and it is backed by future revenues from mining projects.

All principal interest payments will be deposited in an escrow account.

ICBC will serve as the lead lender but other Chinese banks (including China Eximbank) may contribute to any given subsidiary loan.

Under the terms of the agreement, the Republic of Guinea also granted bauxite mining concessions to three Chinese companies: State Power Investment Corporation (SPIC), Aluminum Corporation of China Ltd. (Chinalco), and China Henan International Cooperation Group.

Aluminium Corp of China (Chalco) agreed to pursue the Boffa Bauxite Mining Project; SPIC agreed to pursue Alumina Mining Project; and China Henan International Cooperation Group agreed to pursue a third Bauxite Mining Project.

The revenues from these three mining operations will be used to facilitate the repayment of the subsidiary loans issued through the framework agreement.

According to a Ministry of Mines ITIE Report published in 2020, repayment of loans made under the agreement will be collateralized by the mineral resources and other revenues relating to mineral rights granted to the Chinese companies.

Chalco’s Boffa Bauxite Mining Project was formally launched on October 28, 2018, and the mine went into operation on April 6, 2020. A groundbreaking ceremony for SPIC’s Alumina Mining Project took place on May 29, 2019.

The Chinese Government approved the first tranche of funding worth approximately $1.3 billion (captured in Record ID#65113) under the loan framework agreement to support five different development projects: 1) the RN1 Coyah-Mamou-Dabola Reconstruction Project (see Record ID#65115), 2) the Conakry Urban Road Project (see Record ID#65116), 3) the Lisan-Fomi-Kankan Electricity Transmission Line Project (see Record ID#64408), 4) the Regional University Extension and Rehabilitation Project (see Record ID#64383), and 5) the Conakry Port Extension Project (see Record ID#52260).