China in Africa
8. China's Mining Footprint in Africa
China
is
now
the
prime
driver
of
world
mineral
prices
and
a
number
of
Africa
countrieshave
become
key
beneficiaries
of
this
process.
The
country
is
unable
to
meet
its
annualdemand
for
copper,
zinc,
nickel
and
a
range
of
other
raw
materials.
Consequently,
Chinanow
imports
US$100
billion
worth
of
base
metals
every
year,
consuming
more
than25percent
of
the
world’s
supplies.
This
includes
30
percent
of
global
zinc
output,
25percent
of
global
lead
output
and
22
percent
of
refined
copper
production.
Furthermore,the
Chinese
economy
absorbs
27
percent
of
the
globe’s
iron
and
steel
and
25
percent
ofits
aluminum
output.
In
2003,
China
passed
the
United
States
to
become
the
world’s
largest
copper
consumerand
by
the
following
year
consumed
46
percent
more
than
the
United
States.
In
2006,China
announced
plans
to
set
up
Strategic
Mineral
Reserve
to
stockpile
uranium,
copper,aluminum,
iron
ore
and
other
minerals.
The
reserves
are
critical
for
providing
China
with
abuffer
to
adjust
to
market
fluctuations,
manage
emergencies
and
guarantee
the
security
ofresource
supplies.
Africa
plays
a
critical
role
in
the
provision
of
key
minerals
for
the
Chinese
economy.
In
thecase
of
minerals,
China
is
almost
exclusively
reliant
on
Sub-Saharan
Africa
for
its
cobaltimports,
and
significantly
reliant
for
manganese
(the
latter
primarily
from
Gabon,
SouthAfrica
and
Ghana).
Sub-Saharan
Africa
is
also
an
important
supplier
of
timber
(mainly
fromGabon,
Republic
of
Congo,
and
Cameroon)
and
chromium
(mainly
from
South
Africa,Madagascar,
and
Sudan),
accounting
for
around
one-seventh
of
China’s
global
importseach.
However,
with
respect
to
China’s
imports
of
iron
ore
and
copper,
Sub-SaharanAfrica
is
still
a
relatively
small
(but
growing)
contributor.
China
has
shown
a
growing
interest
in
the
mining
belt
of
central
southern
Africa,comprising
Zambia,
Tanzania,
and
Mozambique.
This
area
is
well
endowed
with
copper,iron,
gold,
manganese,
and
other
base
metals.
Sub-Saharan African share of China’s imports of selected natural resources (2001-2008)
China
is
now
the
prime
driver
of
world
mineral
prices
and
a
number
of
Africa
countries
have
become
key
beneficiaries
of
this
process.
The
country
is
unable
to
meet
its
annual
demand
for
copper,
zinc,
nickel
and
a
range
of
other
raw
materials.
Consequently,
China
now
imports
US$100
billion
worth
of
base
metals
every
year,
consuming
more
than
25percent
of
the
world’s
supplies.
This
includes
30
percent
of
global
zinc
output,
25
percent
of
global
lead
output
and
22
percent
of
refined
copper
production.
Furthermore,
the
Chinese
economy
absorbs
27
percent
of
the
globe’s
iron
and
steel
and
25
percent
of
its
aluminum
output.
In
2003,
China
passed
the
United
States
to
become
the
world’s
largest
copper
consumer
and
by
the
following
year
consumed
46
percent
more
than
the
United
States.
In
2006,
China
announced
plans
to
set
up
Strategic
Mineral
Reserve
to
stockpile
uranium,
copper,
aluminum,
iron
ore
and
other
minerals.
The
reserves
are
critical
for
providing
China
with
a
buffer
to
adjust
to
market
fluctuations,
manage
emergencies
and
guarantee
the
security
of
resource
supplies.
Africa
plays
a
critical
role
in
the
provision
of
key
minerals
for
the
Chinese
economy.
In
the
case
of
minerals,
China
is
almost
exclusively
reliant
on
Sub-Saharan
Africa
for
its
cobalt
imports,
and
significantly
reliant
for
manganese
(the
latter
primarily
from
Gabon,
South
Africa
and
Ghana).
Sub-Saharan
Africa
is
also
an
important
supplier
of
timber
(mainly
from
Gabon,
Republic
of
Congo,
and
Cameroon)
and
chromium
(mainly
from
South
Africa,
Madagascar,
and
Sudan),
accounting
for
around
one-seventh
of
China’s
global
imports
each.
However,
with
respect
to
China’s
imports
of
iron
ore
and
copper,
Sub-Saharan
Africa
is
still
a
relatively
small
(but
growing)
contributor.
China
has
shown
a
growing
interest
in
the
mining
belt
of
central
southern
Africa,
comprising
Zambia,
Tanzania,
and
Mozambique.
This
area
is
well
endowed
with
copper,
iron,
gold,
manganese,
and
other
base
metals.
Sub-Saharan African share of China’s imports of selected natural resources (2001-2008)
Source: COMTRADE database by the UNSD, data obtained using WITS software – 2007/2008
Of these three countries, Zambia has the most advanced level of Chinese engagement. China has secured direct equity interests in copper, coal, and manganese reserves. The purchase of an 85 percent stake of Chambishi copper mine for about US$20 million in 1998 was one of China’s earliest overseas mining investments. After its reopening in 2003, the mine has seen continuous inflow of more than US$200 million of new investment, including construction of the smelter plants. The mine’s production capacity reached 150,000 tons of copper per annum in 2008. In coal, Chinese Collum Mine at the old Nkandabbwe mine in Sinazongwe district started production in 2003. In 2005, a private Chinese firm purchased a manganese mine with proven deposit of 4 million tons in Zambia's old industrial town of Kabwe. In 2006, around 27 percent of Zambia’s exports of copper were destined for China, compared to 100 percent of manganese. Politically, China’s engagement with Zambia has become a contentious issue. Opposition figure Michael Sata was active in criticizing the growing Chinese presence in the country during the 2006 election campaign, claiming that Chinese investments were exploitative” and that the Chinese should be expelled for mistreating Zambian workers. In reaction, Chinese stakeholders in Zambia tighten their relationship with the ruling party. While South Africa is a natural port of call for Chinese mining companies, competition is tough in the local mining environment while the country’s draconian black economic empowerment (BEE) criteria has made Chinese investors wary of committing large investments into the mining sector – a trend evident with mining companies from other countries, especially Canada. Therefore, compared to other countries, Chinese fixed capital investment in the mining sector has been comparatively small. However, there are recent indications that Chinese companies are looking more closely at obtaining iron ore deposits in the Northern Cape. For example, Chinese Steel giant Baosteel has obtained a share in the Australian mining company Aquila which has exploration concession areas in the Province. Other Chinese mining companies active in South Africa include: Sinosteel; East Asia Metals Investment (subsidiary of Sinosteel); Jinquan Iron & Steel (Jisco); MinMetals; Zijin Mining and PMG.
8.1. Country Case Studies

China’s intentions in Africa on the mineral extraction front, could not have been madeclearer after China announced a US$5 billion loan to the DRC for infrastructuredevelopment in September 2007, following up with the signing of another US$3,8 billion formining investments projects in January 2008. The sheer size of the loan took Westerncountries by surprise and cemented the perception that China was becoming Africa’s mostimportant development partner. Under the terms of the agreement signed by the Ministerfor Reconstruction, Pierre Lumbi,, the Export-Import Bank of China pledged the nearlyUS$9 billion loan and finance to build and upgrade the DRC’s road (4000 km) and railsystem (3200 km) for transportation routes that connect its extractive industries, and todevelop and rehabilitate the country’s strategic mining sector in return for copper andcobalt concessions. In return, China would gain rights to extract up to 10 million tons ofcopper and 420 000 tons of cobalt (proven deposits) over a 15 year period, with operationsexpected to begin in 2013.
The agreement stipulated that only one in five workers can be Chinese. In each of theprojects half of one percent of the investment must be spent on transfer of technology andon training Congolese staff. One percent has to be spent on social activities in the region,and three percent to cover environmental costs. Ten to 12 percent of the work has to besubcontracted to Congolese companies.
The DRC National Assembly approved the agreement in May 2008, involving Groupementd’Entreprises Chinoises – a Chinese conglomeration involving China Railway EngineeringCorporation (CREC), Sinohydro Corporation and Metallurgical Group Corporation, whichwill control a total of 68 percent of the new Joint Venture Sicomines, with the rest of theshares held by Gécamines and the DRC government.
Other than long distance road and rail construction, the package also includes two hydroelectricdams and the rehabilitation of two airports. If fully disbursed, this will be the singlelargest Chinese investment in Africa. No other country or international financial institutionhas come close to initiating such a massive project in such a short period of time. SomeWestern diplomats privately expressed the view that if implemented properly, the dealcould be good for the DRC.
Yet almost immediately the size of the loan elicited public criticism from the InternationalMonetary Fund (IMF) that the DRC was taking on too much debt. In reaction, recentreports suggest that the loan may be paired back to US$6 billion. Additionally, thedownturn in the commodity cycle has also seen many Chinese mining firms shut downtheir cobalt operations in the DRC. However, it has been the ongoing fighting in theeastern Congo which has seen China put all development linked to the loan on hold untilsuch time as the security situation improves - this after several of its expatriate workershave become victims of armed robberies, heists and hijackings in eastern DRC, includingreports that one Chinese worker had his head cut off and left impaled on a stake. MostChinese expatriate mining compounds in eastern DRC have been closed down andpersonnel moved to safer areas and in some instances relocated out of the country toplaces like Angola.
China’s
determination
to
access
critically
needed
raw
materials
has
been
no
more
betterillustrated
in
the
chaotically
unstable
but
mineral
rich
country
–
Guinea
Conakry.
Theshock
letter
written
by
Conte’s
former
Secretary
General,
Sam
Mamady
Soumah
in
earlyJuly
2008
to
Rio
Tinto
rescinding
its
potentially
massive
iron
ore
reserves
in
the
Simandouconcession
sent
shock
waves
through
the
mining
fraternity.
Rio
Tinto’s
top
management
had
been
aware
of
“rumours”
about
“under
the
tablenegotiations”
for
the
Simandou
concession
taking
place
between
the
government
andfirms
such
as
BHP-Biliton,
Benny
Steinmetz’s
BGP
and
certain
Chinese
ventures.
Indications
are
that
the
late
president
Conté
wanted
the
Rio
Tinto/Simfer
combine
tospeed-up
investment
in
the
local
transformation
of
the
ore
deposits,
after
receiving
aChinese
proposal
to
build
the
rail
links
for
Dabola
and
Tougué.
This
was
strengthenedround
about
the
same
time
that
Rio
Tinto
received
the
expulsion
order
from
the
Simandouconcession,
with
Guinea
and
China
discussing
a
deal,
which
could
see
billions
of
dollars
ofChinese
investment
flowing
into
country
in
exchange
for
mining
rights.
Facing
financialpressures,
Rio
Tinto
made
it
clear
that
it
was
not
willing
to
commit
to
any
new
expansionplans
in
Guinea
Conakry
until
global
economic
condition
improved.
The
company
felt
thatthe
agreement
it
had
with
the
government
allowed
for
this
delay.
The
governmentdisagreed,
however.
The Chinese Offer
During
July
2008,
a
delegation,
including
officials
from
the
Chinese
Development
Bank(CDB)
spent
a
week
in
Guinea
to
discuss
a
range
of
investment
projects
with
state
andprivate
sector
investors,
while
the
President
of
the
National
Parliament,
El
Hadj
AboubacarSomparé
visited
China
from
13-20
July
2008.
According
to
Ousmane
Dore,
GuineanEconomy
and
Finance
Minister,
further
missions
were
expected
to
go
to
Beijing
over
thecoming
months
to
meet
with
the
Chinese
companies
about
the
operational
details
of
thisagreement.
A
“strategic
committee”
has
been
formed
to
oversee
and
implement
plannedprojects
in
the
country.
By
making
bauxite
and
iron
ore
available
to
the
Chinese,
Guineacould
unlock
an
overall
sum
of
investment
that
could
support
these
projects.
Importantly,
according
to
reliable
sources,
these
meetings
resulted
in
promises
of
massivefinancial
aid
to
Conakry
which
were
the
prime
reason
behind
the
cancellation
of
Rio
Tinto’sSimandou
concession.
Guinea’s
parliamentary
speaker
was
invited
by
his
Chinese
counterpart,
Wang
Jiarui,
andattended
several
briefings
(at
the
China
Development
Bank
and
at
Henan
InternationalMining
Corp’s
HQ
in
Henan),
where,
according
to
one
reliable
source
Jiarui
formulated
theidea
that
Beijing
could
offer
Conakry
a
mineral
investment
solution
free
of
the
IMF
andWorld
Bank’s
fine
print
on
strict
conditions
and
draconian
monitoring
requirements.
Anenthusiastic
Somparé
arrived
back
in
Conakry,
holding
a
meeting
with
Conté,
explainedthat
the
Chinese,
desperately
lacking
aluminium,
would
give
“everything”
for
Guinea’sconcessions:
roads,
hospitals,
dams,
food,
machinery,
schools,
even
entire
cities.
The
Chinese
were
again
contacted,
this
time
by
Prime
Minister
Souaré,
who
met
PresidentHu
Jintao
in
Beijing,
during
the
Olympic
Games
in
September,
as
well
as
the
heads
ofChina-Eximbank,
the
CDB,
and
a
consortium
of
metal
and
non
metal
mineral
companies,including
powerful
Chinalco
–
once
already
involved
in
an
ambitious
plan
to
developGuinean
Bauxites
but
canceling
it
due
to
Conakry’s
demand
of
the
involvement
of
severalmiddlemen”
networks).
He
also
traveled
to
Zengzhou,
in
the
Henan
province,
where
he
met
the
heads
of
therecently
formed
Henan
International
Mining
Corp.
Ltd,
the
consortium
that
in
principlewould
explore
the
Simandou
concession,
and
other
bauxite
treasures
in
Guinea.
Thisconsortium
includes
at
least
8
to
12
companies:
Yongcheng
Coal,
Henan
YongshangMetals
and
Minerals,
Xuchang
Minerals
and
Industry,
Henan
Hongxing
Mining
Machinery,Henan
Ruishi
Special
Refractary
Co.,
CAEC,
etc.
The
Chinese
were
reportedly
offered
ashare
of
41
to
50
percent
on
the
whole
Simandou
iron
ore
area,
if,
in
return,
they
wouldoffer
a
“sustainable
all
round
development
plan”
for
the
country.
In
the
end
part
of
the
Simandou
concession
went
to
Israeli
entrepreneur
Benny
Steinmetz.His
ability
to
develop
the
deposits
are
highly
questionable.
China’s
appetite
to
Conakryhas
dipped
somewhat
given
the
political
confusion
in
the
country
–
even
considered
toorisky
for
Chinese
companies,
while
world
economic
conditions
remain
poor.
Towards
the
end
of
2008,
another
Chinese
joint
venture,
Henan
International
Mining
Co,started
negotiating
the
granting
of
several
bauxite
permits
in
the
west
of
the
country.
Thelicenses
cover
558
km2
and
hold
and
estimated
10
billion
tonnes
of
ore.
The
joint
venture,created
on
26
September
2007,
includes
China
Henan
International
Cooperation
GroupCo
Ltd
(Chico,
41
percent),
Yongcheng
Coal
&
Electricity
Group
Co
Ltd
(51
percent),Henan
State-owned
Assets
Operations
Co
(4
percent)
and
Henan
Zhonglian
Mines
Co
Ltd(4
percent)
and
has
capital
of
US$
26,5
million.
8.2. Recent Mining Developments
- In January 2009, Liberia has signed a US$2,6 billion agreement with China Union todevelop its main ore mine. China Union has promised to build a one-million-tonne-ayearrefining facility at the Bong iron mines, which are situated approximately 150kmfrom Monrovia.
- On 24 April 2009, China granted Niger a US$95 million preferential loan to expanduranium production. China’s National Uranium Corporation (SINO-U) is expected toproduce 700 tons annually when production reaches capacity next year.
- The China Non-Ferrous Metals and Construction (CNMC) and Yunnan CopperIndustry is set to commission a US$300 million copper smelter in Zambia’s Chambishitown. The town is now a tax-free economic zone, intended to attract Chinese investors.
目次
- 1. Introduction
- 2. Africa in the Context of China's Resource Acquisition Requrements
- 3. The Origins of China's New Africa Policy
- 4. The Role of FOCAC
- 5. China's New Resource Acquistion Business Model
- 6. The Role of Chinese Institutions in the Acquisition of Business Intelligence
- 7. China's Energy Footprint in Africa
- 8. China's Mining Footprint in Africa
- 9. China's Telecommunications Footprint in Africa
- 10. China's Infrastructure Footprint in Africa
- 11. The Role of China's Financial Institutions
- 12. Implications for Japanese Investors
- Annexure I: The Focac Fuc Structure
- Appendix II: The Forum on China-Africa Cooperation
- Annexure III: Ministry of Commerce
- Annexure IV:Profile Chen Yuan and Chi Janxin