The Democratic Republic of Congo and Zambia are two border countries which are going through a similar economic situation in connection with their mineral wealth, most of which has been ceded to Chinese companies.
Felix Tshisekedi for the DRC, three years after coming to power, ordered since last July the re-visitation of mining contracts, most of which were signed with Chinese companies.
Likewise for his newly elected Zambian counterpart, Hakainde Hichilema, who just declared on Friday, September 10, that his new government would implement policies to reduce the budget deficit, restore economic growth and review mining policies. In his first speech to a new session of parliament since his election in August, officials would also review agricultural policies, revise electricity prices and reform state-owned electricity company Zesco.
Last November, Africa’s second-largest copper producer became the first country on the continent to default on sovereign debt during the pandemic, after failing to pay off its $ 13 billion in international debt loans.
“Rebuilding our economy is a priority on our agenda. We will implement policies to close the budget deficit while ensuring that confidence is restored in the markets, ”Hichilema said.
“We have indeed inherited an economy which is in a desperate situation and requires bold and decisive measures to be taken,” he said, adding that his government was determined to put an end to the accumulation of debt. expensive public.
Zambia’s external debt consists of around $ 3 billion euro bonds, $ 3.5 billion in bilateral debt, $ 2.1 billion owed to multilateral agencies and $ 2.9 billion in commercial bank debt.
Zambia also owes mining companies more than $ 1.5 billion in value added tax (VAT) refunds, an issue that has soured relations between the government and the mining sector according to Reuters.
VAT refunds are the industry’s top priority, said Godwin Beene, CEO of the Zambia Chamber of Mines, which represents mining companies such as Kansanshi Mining of First Quantum Minerals and Lumwana Mining of Barrick Gold.
‘Game-changer’ for mining companies
Hichilema’s market-friendly position will attract new investment in Zambia’s mining sector and help boost the country’s copper production at a time when copper prices are hitting record highs, Chinese Beene said who see themselves increasingly targeted in their last ten mining acquisitions in Africa.
“This election has been a game-changer for the industry,” he told Reuters.
Hichilema’s predecessor, Edgar Lungu, had pushed for more public ownership of the mines. State-owned mining investment firm ZCCM-IH incurred $ 1.5 billion in debt in January to take over Glencore’s majority stake in the Mopani copper mine.
The previous government was looking for an investor to finance the expansion of the mine, which would increase production from 34,000 tonnes of copper per year to 150,000 tonnes.
Zambia as a whole hopes to increase its annual copper production to 2 million tonnes by 2026, new Finance Minister Situmbeko Musokotwane said last month. The country produced 882,000 tonnes last year.
Achieving this goal will require significant investment in Mopani and other mines across Zambia, as well as in exploration.
The other position favorable to the markets is the legal battle that Congolese President Félix Tshisekedi has just started over the mining contracts signed by his predecessor Joseph Kabila. “I am tired of seeing foreigners come here with empty pockets and leave as billionaires, while we remain poor”, had launched the President of the Democratic Republic of Congo, Félix Tshisekedi, during a meeting in Kolwezi on the 13th. last May, acclaimed by thousands of inhabitants, in the former Katanga, the current province of Lualaba. A region that is home to immense mineral wealth: copper, cobalt, uranium and radium. The DRC holds 80% of the world’s cobalt reserves.
Thus, the Congolese and Zambian President, converge towards the same objective, which can bring them together in order to share “experiences and expertise” favorable for their countries.