china and the drc

China gives DRC $5 billion mining loan

China gives DRC US$5 billion loan
China has given the Democratic Republic of the Congo US$5 billion to pursue mining and infrastructure projects, DRC minister for infrastructure Pierre Lumbi said.

About US$2 billion will fund a new joint venture mining company between the countries, Lumbi told reporters in the capital, Kinshasa. The remainder will go toward roads, railroads, hospitals, housing and two universities as the nation tries to revive an economy ravaged by civil wars, he said. The funds will be spent on "the big works, not little projects," Lumbi said.

China is investing in African projects from Sudanese oil fields to Zambian copper mines to tie up raw material supplies to feed its booming economy. The country gives Africa about US$2.7 billion in aid a year, up from US$100 million a decade ago, according to an estimate by the US Military`s National Defense University.

China had invested US$11.7 billion in Africa by the end of 2006, with most of the money going to oil producers Nigeria, Angola and Sudan. In February, China pledged US$800 million to Zambia and in November, President Hu Jintao forecast annual trade with Africa would double to $100 billion by 2010.

While ownership of the mining venture is yet to be decided, Congo offers China access to reserves of cobalt, gold, uranium,diamonds, tantalum and tin.

"It`s a very high risk investment," Daniel Alvaregna, a researcher at the Centre for Chinese Studies at South Africa`s Stellenbosch University, said in a telephone interview. "It`s part of a wider push by China to have Africa on its side."

In addition to gaining access to the continent`s resources, China is looking to secure markets for its goods and get a better chance of securing investment opportunities, Alvarenga said.

Congo is the size of Western Europe. More than 3,000 km (1,865 miles) of railroad will be built along routes that are crucial to the mining industry, Lumbi said. "This is important to transport the masses of cobalt and copper that will be produced here," he said. Another 3,000 km of road would be built along key trade passages in the east of the country, where tin ore is currently transported by plane, Lumbi said.

"Most of these roads exist already, but need to be repaired," he said.

Thirty-one hospitals, 5,000 houses and two universities will also be paid for by funds allocated to infrastructure, Lumbi said. The DRC held its first democratic elections in four decades last year.

(Bloomberg, 19th September)