China in a Bull shop: China Update

China in a Bull shop: China Update

10th November 2006

"Locals are questioning the benefits. Instead of boosting employment in Africa, [Chinese companies] tend to select their employees from their own bloated and underemployed workforce, leading to growing local resentment". That's the opinion of an industry insider, quoted in an article by David Stanway published last week by Interfax China news. ("Soft power and hard raw materials: China's African campaign" David Stanway, November 10 2006).

Just over a week ago, Chinese diplomats met with representatives of no less than 48 African states in Beijing. It was an exercise in reassurance - and self promotion. Says Stanway: "Despite the historical ties that China has forged with Africa since the celebrated Bandung Conference in 1955, and despite a number of fresh humanitarian commitments relating to debt forgiveness and more investment in the education and health of Africa's worst-off communities, China's true motives in the continent have come under intense scrutiny...Behind all the carefully honed declarations about China's commitments to the continent, it is its "mutually beneficial" interest in African resources that has received the most attention. China's soft power is being employed to gain access to hard raw materials."

China has been investing in oil and mineral projects where "few others would dare to tread."

Sudan: gold and iron

China is the now the biggest investor in Sudan, mainly through the China National Petroleum Corporation (CNPC) which produces around 20 million tons of oil a year from the vicious regime.

But in March, Tianjin-based North China Geology Survey Bureau (NCGSB) signed a MOU with the Sudan government to prospect and explore for gold mines in approximately 6,000 square km of Nile State, with the aim of acquiring a 55 percent stake in future mines. The Sudan Minister of Mines and Energy has promised that several Sino-Sudan joint gold and iron ore mining projects would start construction at the beginning of 2007.

Zimbabwe: chrome and gold

While the international community "shuns" Robert Mugabe's Zimbabwe (though not, we might add, multinational mining companies such as RioTinto) China has, says Stanway "stepped in with alacrity, emphasizing its principles of "non-interference" and "mutual benefit", while trying to gain exclusive access to the country's chrome reserves." Last June it signed a US$1. 3 billion-dollar deal with the Zimbabwe regime, promising to help reconstruct the country's aging power network in exchange for the chrome; Chinese companies are also planning to open up new coal mines

DRCongo: copper and cobalt

Huayou Cobalt Nickel Material Co. Ltd (Huayou), a leading private cobalt chemical producer in Zhejiang, has been licensed by DRCongo's Gecamines, to prospect 20 deposits in a copper-cobalt belt situated on the border with Zambia; substantial exploration is scheduled to start in 2008 or 2009.

Another Zhejiang private company, Ningbo Xingrong Bicycle Co. Ltd set up a mining subsidiary in the DRC to develop a cobalt belt covering 27,200 square meters near Lubumbashi, a city in the southeastern corner of the DRC. .

Zambia: copper and cobalt

On November 7th the China Nonferrous Metal Mining (Group) Co. Ltd (CNMC) signed an agreement with the Zambian government to launch a 150,000-ton crude copper project around its existing Chambishi Copper Mine. Scheduled to start up immediately and be completed at the end of 2008, it will turn concentrate from the Chambishi Copper Mine to crude copper at an investment of around US$220 million. The CNMC has also signed a cooperation MOU with three Zambian mining enterprises in May to exploit seven copper-cobalt deposits in northwest Zambia.

Gabon: iron

In April, Sinosteel Group, one of China's largest steel and raw material traders agreed with the Gabonese government to develop the Belinga Iron Mine and Mbigou Manganese Mine.

South Africa: ferrochrome

Sinosteel last month also signed a contract for ferrochrome mining and smelting in South Africa with Samancor Ltd. worth USD 230 million.

Rebuffing allegations that China is now acting in Africa as a neo-imperial power, its Foreign Affairs spokesperson, Liu Jintao, told the press at last week's conference: "The fundamental fact is, who is making these charges?" China and Africa were, he said, "fellow victims" of old-fashioned colonial powers; China was pledged to "non-interference," "double win," and "mutual benefit."

Comments David Stanway: "China's new approach to Africa is, however, proving increasingly incompatible with its traditional ideological alignments. In the 1960s, China was building railroads, bridges, irrigation facilities and dams in Africa as part of the global battle for hearts and minds, trying to gain geopolitical leverage at the fringes of the Cold War...[N]ow, its concerns are predominantly economic, and part of the efforts to find the resources to sustain its post-Mao boom. "

The Ramu Nickel Cobalt Project, Papua New Guinea

The China Metallurgical Construction Group (MCC), the country's largest metallurgical engineering enterprise last March signed an agreement with Papua New Guinea to "develop" the highly controvesial Ram Nickel Cobalt Project . It will cost $800 million and is funded by the Chinese government and MCC, along with Jilin Haorong Nonferrous Metals Group (previously Jilin Nickel) and Jinchuan Group.

The project is scheduled to start construction next April and commence production in March 2009, with capacities of 32,800 tons nickel and 3,200 tons cobalt a year.

[Source: Interfax China, November 10 2006]