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March 11, 2022

Chinese mining companies financing development in the Central African Republic

In the Central African Republic, several Chinese companies are active in various fields. Two of them, Tien-Pao and HW-Lepo, stand out in the west near the Cameroonian border, where they extract gold from the reddish earth. Every year, hundreds of millions of CFA francs paid into the public treasury by Tien-Pao and HW Lepo allow this poor country to pay the salaries of civil servants, build schools and hospitals and fight against youth unemployment. By The Museba Project, a non-profit media organization dedicated to watchdog journalism in Central Africa and the Great Lakes region.

Does this mining really benefit the Central African Republic? The reporter from The Museba Project investigated the incorporation of Tien-Pao and HW Lepo, their activities, their financial contributions to the state coffers and even their commitment to the fight against unemployment.

The mining site in the town of Abba, west of the Central African Republic, is teeming with people this morning in February 2020. Excavators are digging up portions of land in search of gold. These machines belong to Tien-Pao, a Chinese company which was granted, ten years ago, a vast plot for the research and exploitation of the yellow metal.

A mining site in the west of the Central African Republic. Photo credit: Fiacre Salabe.

In this locality of the prefecture of Nana-Mambéré, some young people employed by the company are full of praise for the Chinese.

"I am one of the first young people recruited by this company", declares a young man . “Thanks to the work I do with the Chinese people of Tien-Pao, I was able to carry out some of my projects, in particular the construction of my house”.

In Gaga, a village located 200 km from the capital Bangui, HW Lepo, another Chinese mining company, headed by Li Laota, has hired young men and women who mine the gold all day long. One of them, Fabien Lingoupo, admits having learned a lot of exploitation techniques with the Chinese.

“Most of our work is done by machines,” says Lingoupo . "They (the Chinese) pay us well and in addition they also do social work for the people of the village" .

With a population of around five million, the Central African Republic (CAR) is a poor central African country. For years, CAR was rocked by civil wars that set back its development. With the election of Faustin Archange Touadera in 2016, the authorities are betting in particular on mining resources such as gold and diamonds to bail out the state coffers. The Chinese mining companies, Tien Pao and HW Lepo, are participating in this national effort by providing employment to locals in the mining areas. But they don't stop.

Young miners at work. Photo credit: Fiacre Salabe.

Mining royalties

In CAR, a mining company pays the public treasury the sum of two million CFA (US$3,362) per year for the granting of an exploration permit. According to our information, Tien-Pao has five research permits in cities inside the country namely Abba, Yaloké, Gaga, Bossembélé and Lambi. Through these five mining sites, Tien Pao pays a total of 10 million CFA (US$16,814) annually.

In addition, the renewal of each permit per year is set at the sum of 3 million CFA (US$5,044), according to the CAR mining code. Since 2016, Tien Pao has renewed its research permits six times in the cities concerned. The Chinese company spent the sum of 15 million CFA (US$25,221) for this, or 90 million CFA (US$151,330) over the period of five years; in addition to the 10 million FCFA (US$16,814) for the acquisition of research permits.

"I can tell you that payment is made directly to the State's account and not at the level of the ministry in charge of mines and geology for which we are responsible", declares Sylvain Marius Ngbatoka, project manager at the CAR ministry of mines.

“At each renewal of the annual research permit, an additional sum of one million CFA (US$1,681) is set,” said the official.

In five years of operation in the Central African mining areas, Tien-Pao would have paid the State about 125 million CFA (US$210,180), according to Hortence Seneboye, head of the business dispute management service at the CAR Ministry of Finance and Budget. This is a significant contribution, she says, to the growth of the CAR economy.

Like Tien-Pao, the HW Lepo company has also made financial sacrifices to be in good standing vis-à-vis the State since 2017. The mining code provides that the granting of mining permits to companies exploiting gold amounts to 3 million CFA (US$5,044) per year. With HW Lepo's five years of work in the Gaga village, the Chinese have paid 15 million CFA (US$25,221) to the public treasury, in addition to the million CFA (US$1,681) annually for the renewal of the permit.

Tien-Pao and HW Lepo companies were approached by the reporter but declined to comment.

Map of the Central African Republic.

Border taxes

Chinese mining companies do not only pay for research permits or their renewal, their imported work equipment is taxed by CAR customs. Payments of taxes and levies on materials to be used for research activities also seem important.

Thus, Tien-Pao has imported a dozen machines since 2016, according to an internal source. These are generators, work equipment, construction equipment, and containers of mining research tools. The Chinese would have spent a hundred million CFA (US$168,144) to pass these objects through customs, according to our source.

The royalties paid by the Chinese mining companies Tien-Pao and HW Lepo from 2016 to 2021 have helped the CAR State to meet sovereign charges, according to Abdias Teke, tax expert at the CAR Chamber of Commerce.

"The payments of customs duties and taxes made by companies established in CAR enable the State to pay the salaries of civil servants, student scholarships, pensions for retirees, not to mention the construction of roads, hospitals, buildings public and many others,”  explains tax expert Abdias Teke.   

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