The fact that China is scurrying to mop up asset bases and gain control over crucial mineral resource reserves has become a topic of serious discussion at seminars and conferences, the latest one being held at Johannesburg two days ago. China has an edge over western nations and western countries interested in these resources, firstly because China has gained popularity with African governments due to its economic support for infrastructure building and overall development, and secondly because it has vast cash reserves to fund the acquisitions. On the other hand, the onset of the global financial crisis had seen Western nations withdraw aid and support to Africa as they themselves were reeling under immense pressure. These nations are unable to match the numbers or raise funds needed for the acquisitions. It is a race they are likely to lose to the Chinese.

For China the timing is most favorable as the recession has also led to a slump in prices, therefore, it is the right time to clinch deals. Most of the Chinese companies expressing interest in making these acquisitions, are state-supported, so they need not worry about the need to placate shareholders who may object.

China has been cautiously reformulating its Africa policy and trying to wriggle out of investments unlikely to yield results or those that are threatened due to political instability. It is proceeding ahead with only those ventures that are viable and beneficial. China has a contract with Guinea where it is developing infrastructure facilities in exchange for bauxite and has signed a $9 billion deal with Congo to develop its roads, schools, hospitals, and railways, and in return gain access to its copper and cobalt reserves. These minerals are crucial for China’s consistent industrialization and advancement. Zambia has also selected the NFC Africa, a subsidiary of China Non-Ferrous Metals Corporation, to run its Luanshya Copper Mines that are being reopened after being shut during the beginning of the recession.

Another sector where China has extended support is the banking sector, besides writing off African debt to the tune of millions of dollars.

It is difficult to gauge or exactly state who benefits more, China or Africa. The only known fact that the world sees is that both sides are happy, Africa with what it is getting in terms of economic elevation, and China, with all the resources it so desperately needs.

Source : Suppliers Africa