China Eximbank provides RMB 426 million government concessional loan for Djibouti Assal Lake Salt Export Terminal Project at the Port of Goubet

On November 11, 2012, the Chinese Government and the Government of Djibouti signed a preferential loan framework agreement for the Djibouti Assal Lake Salt Export Terminal Project at the Port of Goubet. Then, on November 19, 2012, China Eximbank and Djibouti’s Ministry of Finance signed an RMB 426,000,000 (FDJ 11,400,000,000/$63,998,908) government concessional loan (GCL) agreement for the Djibouti Assal Lake Salt Export Terminal Project at the Port of Goubet. The borrowing terms of the GCL were as follows: a 7.5-year maturity, a 5-year grace period, a 2.5% interest rate, a 0.5% management fee, and a 0.5% commitment fee. According to Djibouti’s Ministry of Economy, Finance, and Industry, the GCL (loan) had achieved a 20.8% disbursement rate as of 2014 ($13,354,884 out of $63,998,908) and it ultimately achieved a 82.4% disbursement rate (FDJ 9,388,000,000 out of FDJ 11,400,000,000). The cargo facility at the Port of Goubet was designed to facilitate the export of salt and gypsum deposits from Lake Assal, the world’s largest undeveloped salt reserve and the second most saline body of water on Earth after Don Juan Pond in Antarctica. This project sought to create a port with a depth of 14 meters, and a terminal bulk carrier located 17 meters from the extraction zone. The project also involved the rehabilitation of a 8.4 km road connecting the terminal to the extraction zone. The Port of Goubet is located 40 km south of the Gulf of Goubet, and its construction was designed to help Djibouti export 5 million tons of salt annually to Southeast Asian countries. China Harbor Engineering Company Ltd., a subsidiary of China Communications Construction Company Ltd., was the contractor responsible for project implementation. Construction began on November 7, 2013, and the President of Djibouti inaugurated the mineral port on June 22, 2017. The completion of this project paved the way for a longer-term commercial investment by China Harbor Engineering Company Ltd. and China Communications Construction Company Ltd.. In 2015, CCCC Resource — a joint venture of Overseas Business Department of China Communications Construction Company Ltd. and China Harbor Engineering Company Ltd. — purchased a 65% equity stake in Djibouti Salt Investment Company (吉布提鹽業投資公司 or SIS). Then, on August 22, 2017, the Government of Djibouti and Djibouti Salt Investment Company signed a concession agreement, which granted Djibouti Salt Investment Company the exclusive rights to develop and extract salt and bromine resources from Lake (Lac) Assal and develop a salt chemical (sodium bromide) industrial park for 50 years. Lake Assal reportedly contains around 2 billion tons of salt minerals that had previously been harvested only in small quantities through traditional methods. There are some indications that the China Eximbank loan for the Djibouti Assal Lake Salt Export Terminal Project at the Port of Goubet may have financially underperformed vis-a-vis the original expectations of the lender. According to the International Monetary Fund (IMF), the stock of the Government of Djibouti's external arrears -- including arrears to China, Belgium, Spain, Iran, Italy, Saudi Arabia, and UAE -- stood at $107 million in March 2020. Then, in May 2020, a Debt Sustainability Analysis (DSA) by the World Bank and the IMF concluded that Djibouti was at a high risk of debt distress. Then, on November 29, 2022, the South China Morning Post reported that the Government of Djibouti had suspended debt service payment to China Eximbank. Djibouti’s Ministry of Economy, Finance, and Industry responded to the South China Morning Post report by releasing a public statement on December 7, 2022. The statement by the Ministry of Economy, Finance, and Industry noted that the Government of Djibouti had honored 85% of its loan repayment obligations in 2022. It also acknowledged that, as part of the Debt Service Suspension Initiative (DSSI), China Eximbank agreed to suspend principal and interest payments due in 2020 and 2021 under multiple loan agreements, and that the Government of Djibouti’s debt service obligations tripled with the expiration of DSSI. Then, in 2023, Djibouti’s Ministry of Economy, Finance, and Industry published a report, which identified the Government of Djibouti’s total arrears to China as being equivalent to DJF 24,104,000,000 ($135,285,797) as of December 31, 2022.

Additional details

1. The Chinese project title is 吉布提阿萨尔盐湖盐业出口码头 or 吉布提盐业开发项目 or ASSAL盐湖开发项目 or 的盐码头项目. The French project title is Construction du port de Ghoubet or Port Minéralier du Goubet or Projet de Terminal minéral du lac Assal. 2. SAIS-CARI identifies the face value of the China Eximbank loan for this project as $64 million in the database of Chinese loan commitments that it released in July 2020. The Government of Djibouti’s Ministry of Equipment and Transport and the Japanese Government identify the face value of the loan as $61,375,440 (see source ID#113054). AidData relies on the RMB 426,000,000 face value that is reported in a 2018 annual report published by Djibouti’s Ministry of Economy and Finance (https://www.dropbox.com/s/1tkijc0o367s9eh/rapport-annuel-dfe-2018.pdf?dl=0). 3. CCCC Resource was incorporated in Mauritius on November 15, 2015 and is principally engaged in the construction of a platform for investment in the resources overseas, especially in Africa. 4. One official source (https://www.dropbox.com/s/4lpgd5hv40ar2vn/R%C3%A9vue-%C3%A0-mi-parcours-de-la-SCAPE-31-12-18-1.pdf?dl=0) puts the China Eximbank loan disbursement rate at 136.39%. This discrepancy warrants further investigation. 5. Djibouti’s external public debt increased from 34 percent of GDP in 2013 to 72 percent in 2021.

Number of official sources

28

Number of total sources

48