Sicomines provides $32 million loan to Gécamines to finance its equity stake in Sicomines

Project narrative

On September 17, 2007, a consortium consisting of China Eximbank, China Railways Construction Company (CREC), and Sinohydro and the Government of the Democratic Republic of Congo signed a “protocol d’accord” (or “项目换资源协议”). According to the terms of the agreement, CREC and Sinohydro would be granted a 68 percent stake in a new joint venture (JV) named the Sino–Congolais des Mines (Sicomines SARL), and a Congolese parastatal called Générale des Carrières et des Mine SARL (Gécamines SARL) would own the other 32 percent. However, on April 22, 2008, a “convention de collaboration” (Chinese name: 关于刚果民主共和国矿业开发和基础设施建设的合作协议) was signed by the Government of the DRC and Sinohydro (on behalf of Sicomines). It specified that ownership of the Sicomines joint venture would be allocated such that CREC holds 43% ownership of the joint venture, Sinohydro holds 25%, Gécamines holds 20%, and a Mr. Gilbert Kalam Babanika (who was eventually appointed as deputy head of Sicomines) holds 12%. On the same day (April 22, 2008), Sicomines SARL issued a $50 million loan to Gécamines SARL for the rehabilitation of three workshops: one in the West (AO), one of the Center (ACP) and one in Lubumbashi (LC). The loan carried a 15-year maturity and a 3.5% interest rate. As of December 31, 2019, the balance of this loan (principal + interest) was $51,750,000 and the borrower was in interest arrears (worth $1,750,000). Then, on January 12, 2018, Sicomines SARL issued a $32 million loan to Gécamines SARL to finance its equity contribution to (equity stake in) Sicomines SARL. This loan carried an interest rate of 12-month LIBOR plus a 1% margin. As of December 31, 2019, the outstanding balance of this loan (including interest) was $10,620,198 and the borrower was in interest arrears (worth $307,700).