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.

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.

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.

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.

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.

• 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.