DRC awards US$660 million contract for 240-MW Busanga hydroelectric project in Africa

240-MW Busanga hydropower plant

After more than 10 years since signing agreements with companies in China and Canada, the Democratic Republic of Congo announced on June 8 that it has awarded a US$660 million contract to a Chinese consortium to build the 240-MW Busanga hydroelectric project.

Construction for the project is expected to last five years, according to local estimates, and will be located on the Lualaba River in the province of Katanga, about 65 km away from Kolwezi in the southern extreme portion of the DRC.

The Busanga hydroelectric generation facility is a direct result of the Sicomines S.A. copper project, a joint venture between DRC-owned mining company Gecamines S.A., China Sinohydro and the China Railway Group Ltd.

Negotiations reportedly began with the consortium in 2007. According to official DRC records, the venture was “agreed upon in 2008 as part of a minerals-for-infrastructure deal, which will result in $3 billion for infrastructure plus an additional $3 billion to develop Sicomines, with all the loans to be repaid with mining profits. The Export-Import Bank of China has already disbursed $826 million in infrastructure projects.”

Published reports indicate the consortium will receive 68% of mining profits.

Sicomines, which began operations in November 2015, is already the Congo's third-largest copper producer, according to the Chamber of Mines in DRC.

The Busanga facility is expected to provide 170 MW to the Sicomines project and fill growing power shortages in the country.

According to the DRC Chamber of Mines 2015 annual report, erratic electricity supply, in addition to other factors, reduced copper output in the country.

The shortage of electricity in Congo grew to 950 MW in 2015, an increase from 542 MW the previous year. Copper production dropped 3% to 995,805 tons in 2015 and output in the fourth quarter slumped 12% from the previous year, according to the report.

As part of the process to build the facility, the consortium had to obtain rights from the project’s previous developer, which is based in Canada.

MagEnergy, a subsidiary of MagIndustries Corp., is a magnesium producer headquartered in Toronto, Canada.

Prior to the Sicomines formation, MagEnergy was recognized by the DRC in 2006 as the company holding the rights to develop Busanga. The company began collecting and reviewing existing technical studies and retained Ingerop of Johannesburg to complete the feasibility study for the project’s civil engineering, hydro mechanical and electrical equipment.

On March 3, MagIndustries Corp. announced the resignation of its board of directors and the company is seeking a new chief executive officer and a new chief financial officer. However, the consortium paid an undisclosed amount to MagEnergy for the rights to develop the Busanga project. 

According to the government of Canada, Canadian investments in the DRC are important, particularly in the mining sector. The DRC contains the third-largest amount of Canadian mining assets in Africa, valued at $3 billion.

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