The $9 Billion Deal Between China And Congo Stands Without Any Changes

Jeudi, juin 4th, 2009

An investment accord to the tune of $9 billion was signed last year between China and the Democratic Republic of Congo. The accord is under threat from the IMF, which wants it changed or else debt relief measures would be withheld. However, China has refused to comply and is proceeding with its side of the accord.

As part of the deal, China has been able to get rights over deposits of 600,000 tons of cobalt and 10 million tons of copper through its state owned companies China Railway Engineering Corporation and Sinohydro Corp. In turn, China will help develop the infrastructure of the country like wide roads, railways, schools, hospitals and universities, the cost of which would equal $6 billion. Another $3 billion would be used for mining purposes. Mining forms 14% of the Republic’s total economic output, and the industry is facing a difficult time due to the decline in the demand for metals from its old buyers in the western nations, which are reeling under the recession themselves. The entire deal is being funded by the Export-Import Bank of China, which has accepted the risk involved in a deal of this size.

The IMF coming in the way of the accord between China and the Republic of Congo is seen as the first attempt by the international organization to influence the pattern of Chinese investments in the African continent. It has threatened to withhold the aid that was to accrue to Congo equaling $10 billion in debt relief besides $500 million in financial support, if the accord is not modified. The loser in the whole affair is the people of Congo who have had to live through two civil wars between 1996 and 2003. The economic growth of Congo has slowed down anyway in response to the global economic downturn. It is likely to be in the range of 2.7% in the current year in contrast to 6% last year.  It is burdened with interest payments on debts incurred previously and desperately needs all the support provided by China. Sinohydro and CREC have invested millions already in their mining projects.

Source : Chinafrica



China Zambia ties strengthen with Luanshya Copper Mine

Mardi, mai 12th, 2009

Zambia is a poor country in Africa that is rich in natural resources. It is rich in copper and the worldwide decline in copper prices plunged it into abject poverty in the 1970s. It was only with the privatization of the copper mines in 2000 that its economic conditions began to improve as there were investments in plant rehabilitation, expansion, exploration and higher prices consequently. The recent global financial crisis has again made cooper prices plunge and Zambia is among the worst affected. Copper brings in over 60% of Zambia’s foreign exchange earnings. Nonetheless, its Luanshya Copper mines are scheduled to restart production in the last week of May, and the responsibility of running the mine has been given to the Chinese firm NFC Africa or China Nonferrous Metals Mining. NFCA has acquired 85% shares in the Zambian copper mine. Copper mining had been stopped and the mine shut in the aftermath of the current financial crisis that led to declining prices and losses subsequently.

This has only increased the Chinese influence in the world of metals with the prospects of rising prices, as an economic recovery is likely in the future. Luanshya’s units, Chambishi Metals Plc and Baluba have both been shut due to losses, and he result was job losses as well. Copper is used for construction and the prospect of an increase in its price will lead to an economic recovery for Zambia. Once the mines begin to full-scale production, developmental work for expansion will also be undertaken, creating multiple jobs for the locals.

This fits in perfectly with China’s endeavor to secure its position in the metals, minerals and oil sectors. China Nonferrous Metal Mining and Yunnan Copper Industry will be commissioning the Chambishi Copper smelter and take production to 150,000 million tons annually. Besides NFCA, other Chinese companies are also willing to invest in the copper mining sector. This will lead to improved conditions for the local Zambian population.

Source : China Africa