China’s race for resources is a considerable opportunity for Africa as it needs significant investment and has a young population, says economist and author Dr Dambisa Moyo.
Moyo will be a keynote speaker at the 2013 Investing in African Mining Indaba, which will take place at the Cape Town International Convention Centre from February 4 to 7. Her address will focus on China’s race for resources and what it means for the world.
She notes that 60% to 70% of Africans are under the age of 25; therefore, Chinese investment should be seen as a welcome strategy to help uplift and grow the African economy.
“There are significant advantages for African economies in engaging with China from a trade perspective, job creation and in terms of investment.”
However, governments need to be savvy when managing investment flows and should recognise that China is particularly interested in assets that are scarce, finite and depleting. Therefore, a balance between the consumption and conservation of these resources should be maintained, Moyo points out.
The issue around commodity scarcity is global, she notes, stressing that Africa is not the only continent faced with this challenge.
Discussions on commodity scarcity, which include weighing demand increases for resources against the ability of mining companies to supply these resources, are being debated worldwide.
“The Mining Indaba is a great platform to have this discussion and to assess the impact that China has on the world and the potential the Asian country holds for investors and mining companies,” Moyo states.
It is not just about Africa but also about the broader campaign China has embarked upon to secure natural resources, as she notes that China is a premier buyer of many resources, with an estimated one-billion-dollar-a-week spend on outside investments since 2005.
China’s foreign takeover of Calgary gas producer Nexen, which was approved by the Canadian government on December 9, has moved Chinese State-owned company China National Offshore Oil Corp (CNOOC) another step closer to securing the deal.
“This is the most significant overseas investment ever made by a Chinese company,” says Moyo.
The Nexen deal was originally announced in July 2012, with Nexen shareholders approving the $15.1-billion deal in September.
Further, Moyo notes that events such as the Mining Indaba assist in the growth of a global mining industry.
She adds that her speech is aimed at mining companies and investors with an interest in the macroeconomic dynamics and commodity pricing dynamics of resource demand and supply between China and the world.
China’s performance and behaviour in global markets and its metals-buying trends are important in determining commodity prices in future.
“Investors aiming to enter the com-modity markets need to know who the key players are,” Moyo emphasises.
“It is important for African businesses to continue pursuing a strategy to form part of a global discourse – such as Brazil, Russia, India and China – or other emerging markets or developed economies. “African businesses need to step up and mature to the point where they are engaging with those networks.”
The Indaba is a great opportunity for African engagement on a global scale, Moyo concludes.