Congo's Gecamines to Decide Tomorrow on China Joint Venture
2008-04-25 11:01 (New York)
By Franz Wild
April 25 (Bloomberg) -- Gecamines, the Democratic Republic of Congo's state-owned miner, will decide tomorrow on whether to adopt a joint-venture agreement with China Railway Group Ltd. and Sinohydro Corp.
``Gecamines board needs to approve the agreement on April 26,'' Congo's Deputy Mines Minister Victor Kasongo said in an interview in the capital, Kinshasa, yesterday. ``The joint- venture company will then exist once a presidential decree has been signed.'' Tomorrow's board meeting should be a ``formality,'' he said.
The Chinese partners will invest $6 billion in the infrastructure of the central African country and put a further $3 billion into the joint venture. In exchange, China Railway and Sinohydro will together own 68 percent of the venture, which will control copper and cobalt reserves.
China is looking increasingly to Africa to meet its growing need for basic metals and minerals. The Congo, which has the world's largest cobalt deposits and Africa's biggest copper reserves, is encouraging investment in its mining industry to help rebuild an economy shattered by a civil war that ended in 2003 leaving 4 million dead.
China Railway in a April 22 statement said it entered a
$4 billion venture in which they will build a mine, roads, hospitals and power plants. Congo's state-owned miner Gecamines, which China Railway refers to as 'Congo Mining', will provide 10 million metric tons in copper and 600,000 tons of cobalt reserves.
Gecamines and its secretary-general Gilbert Kalamba Banika hold the remaining 32 percent.
Good Deal
``It's a good deal,'' Kasongo said. ``We needed to put up those copper reserves to get this kind of financing. The Chinese are getting a return of 20 percent, nothing like many western companies at the moment.''
Demand from China, which saw recorded growth of 10.6 percent in the first quarter of 2008, has pushed metal prices to records. Congo holds a third of all cobalt reserves and a tenth of the world's copper.
The price of copper, used in wire and piping, has jumped fourfold in the past five years as demand has surged for metals to feed China's booming economy. Cobalt prices have surged almost sixfold in that period. |
