As the Chinese economy picks up speed and maintains an economic growth rate of 10%, it is gathering a collection of impressive African mining and energy assets.
China has a stake in the production of all the major commodities produced in Africa, whether it is precious metals, base metals, precious stones, coal, oil or gas.
Research conducted by South African business service provider Emerging Market Focus (EMF) indicates that more than 800 Chinese state-owned enterprises (SOEs) are active in African regions.
EMF CEO Dr. Martyn Davies says that these companies have a presence in almost all African countries.
The Asian giant’s largest SOE investments to date are in the energy endowed economies of Nigeria, Sudan and Angola.
China’s single largest global investment to date has been in Nigeria when China’s oil major China National Offshore Oil Corporation (CNOOC) acquired an oil concession for $2,27-billion.
It is estimated that more than a third of China’s current oil consumption is supplied by Africa.
China, which is the largest consumer of copper, zinc and aluminium worldwide, sources increasing volumes of these base metals from Africa.
Besides attracting Chinese SOE’s, Africa’s mineral wealth is also appealing to private investors.
In October, the Zijin Mining Group, which owns and operates China’s largest gold mine gained a foothold in the South African platinum-group metals industry when it bought a 20% stake in Ridge Mining.
And, in October, the third richest man in China, Larry Yung, invested $800-million in resources group Anglo American, which has extensive mining assets in South Africa, Botswana, Ghana, Guinea, Mali and Namibia.
Davies points out that China has a long-term strategy in place to continue engaging Africa.
According to him, the most strategic driver of China Inc.’s venture into Africa is Beijing's long-term strategy to remove the country’s economy from international commodity markets.
Davies explains that, by acquiring commodity assets at source, negotiating prices with recipient African governments and securing long-term supply contracts, China seeks to establish parallel markets that are removed from international commodity markets where prices are set in either London or New York.
China has also set a $100-billion a year trade target with Africa, to be achieved by the end of 2010.
This will make it the continent’s largest trading partner.
Martyn Davies - China has a long-term strategy in place to continue engaging Africa