Several recent ventures and agreements between China and Africa-based resource companies have positioned the continent as a key destination for meeting China’s resource acquisitiveness, market research firm Frontier Advisory research and strategy head Hannah Edinger has asserted.
She told the yearly Coaltrans Southern Africa conference, earlier this month, that China’s global resource appetite had driven its interest in Africa’s extractive industries, including oil, gold, platinum, copper, nickel and manganese.
In the second half of last year, two key deals in Africa totalling $1.74-billion were concluded with Chinese stakeholders, with a further five major deals – all in the extractive industry and worth a total of $2.86-billion – publicly announced or pending during the same period.
“China’s focus in Africa is centred on overcoming the supply-side constraints in resource extraction, and [the country] uses infrastructure devel- opment to eliminate this supply- side risk.”
This infrastructure gap is perceived by China as a commercial opportunity for its banking institutions and construction companies in the face of increasing domestic competition, as well as presenting an increased level of attractiveness for African infra- structure packages owing to resource offtake possibilities.
The bulk of Chinese foreign direct investment into the continent is injected into the mining and minerals sector, with 79% of African imports to China in 2010 comprising mineral products, with coal leading this export trend.
Although China boasts 19% of the known global coal reserves, these 170-billion tons face the critical obstacle of transportation bottlenecks on the mainland, with transport infrastructure efficiencies lagging behind production.
“The growth of coal consumption in eastern and southern China is occurring faster than that of transportation infrastructure linking northern China to the south of the country, which has resulted in it being difficult to transport locally, and making it more sensible to import,” Edinger noted.
In addition, a five-year strategy aims to promote a sustainable development path and a revised, cleaner energy mix, with emphasis on environmental integrity and renewable energy as a cornerstone of China’s future development.