Tuesday, January 27, 2009

Chinafrica (22) Watching for PRC Influence in Africa

FEATURE-China marches on in Africa despite downturn
Wed Jan 28, 2009 12:04am GMT
By Alistair Thomson

DAKAR, Jan 28 (Reuters) - Chinese businessmen are taking a long-term view and pursuing strategic expansion in Africa even though China's multiplying investments on the continent have lost some lustre in the global downturn.

Beijing and Chinese companies have pledged tens of billions of dollars to Africa in loans and investments mostly to secure raw materials for the world's fastest-growing large economy.
That long-term interest remains intact, despite a worldwide economic slump that has hit China's exports to the rich world and a sharp decline in Africa's mineral shipments to China.
China-Africa trade has surged by an average 30 percent a year this decade, soaring to nearly $107 billion in 2008.

"China is in Africa for the long term, and strategically," said David Shinn, a former U.S. ambassador to Ethiopia and Burkina Faso who teaches at George Washington University's Elliott School of International Affairs.

"They will not veer from this, in my view," he said.

Far from retreating, many Chinese businessmen are hunting for bargains.

Chinese and Indian firms have expressed interest in taking over Zambia's top cobalt producer Luanshya Copper Mines since it halted operations in December, Zambian state media reported.
South Africa's Standard Bank, itself 20 percent owned by the Industrial and Commercial Bank of China (ICBC), said last month it was advising Chinese mining clients on buying opportunities in Africa and elsewhere.

"They are looking at 2009 and saying 'This is a time we see as a very big buying opportunity. We've got the backing from government, we've got the financial means'," Thys Terblanche, the bank's head of mining and metals investment banking, told Reuters.

Beyond mining, Chinese state companies are pushing ahead with strategic energy sector investments and infrastructure; private outfits are continuing to expand in technology areas.
"Some developed Western countries hit by the financial crisis are reducing their investment in Africa. Objectively, this is a powerful opportunity for Chinese businesses to expand their investment and market share in Africa," Cui Yongqian, a former Chinese ambassador to the Republic of Congo and Central African Republic, told a China-Africa trade forum this month.

Trade with Angola, China's biggest source of African crude oil, reached $25.3 billion in 2007 and Beijing has offered Luanda $5 billion in oil-backed loans.

Shenzhen-based Huawei Technologies, China's biggest telecoms equipment maker, is pushing south from its established stamping ground in North Africa.

"I see no reason why they would want to decrease their investments in the telecommunications sector, because that's profitable for them," said George Washington University's Shinn.

"It will vary according to sector and country ... It's very dangerous to generalise about the China-Africa relationship," he said. "They will certainly make tactical retreats where the economy requires it."


Even China's slower economic growth far outpaces that of other major economies. Beijing says it can achieve 8 percent growth in 2009. The IMF says it may cut its forecast to about 5 percent, from the 9 percent it predicted in October.

While competitors lay off workers and delay new projects, China Non-Ferrous Metals Corporation is opening a copper smelter this month in Chambishi town, which Zambia has transformed into a tax-free economic zone to attract Chinese investment.

Zambian President Rupiah Banda and China's Trade Minister Cheng Deming launched a second economic zone this month near the capital Lusaka, where Chinese firms will assemble electrical goods such as television sets and cellphones for export.

"Zambia is still an attractive investment destination (and this will give) confidence to existing firms operating here not to start scaling down their operations," Banda said.

Zambia's Copper Belt is witnessing a growth in Chinese deals.

"In Zambia, mining investment is large-scale and long-term," said Xing Houyuan, director of multinational business at China's Academy of International Trade and Economic Cooperation, which is affiliated to Beijing's Commerce Ministry.

"I don't see any likelihood of a pullback ... Companies won't give up investment plans because of the short term. The biggest impact is likely to be on projects that are still in the planning stage, where the money had not really been committed yet," Xing said.

In Liberia, China Union has just signed a $2.6 billion contract to develop the Bong iron ore deposit.


China also insists the slowdown will not dampen interest.

"We will continue to have a vigorous aid programme here and Chinese companies will continue to invest as much as possible in Africa because it is a win-win solution," Chinese Foreign Minister Yang Jiechi said in South Africa in mid-January.

However, the global slowdown has forced some Chinese businesses to close operations in Africa and prompted a re-think of some of the multi-billion-dollar mega-deals that blazed a trail across the world's poorest continent.

Democratic Republic of Congo and Guinea are cases in point.

DR Congo rode the boom in commodities to attract a wave of foreign investment in its rich but long-neglected copper, cobalt, gold and other mineral resources after post-war elections in 2006. Now that dream is fading.

"We have one processing mill and several workshops in Congo. We have closed them. There are many Chinese-invested firms in Congo and I understand most of them have shut down their operations," said a marketing director at a private firm in China's eastern province of Zhejiang, which supplies cobalt and nickel compounds for use in mobile phone batteries.

"I don't think we will resume production in the factories in Congo any time soon. We expect the economic slowdown could worsen in this year and weigh on the prices further," he said, requesting anonymity because he was not authorised to speak to the media.

Africa's heavy dependence on resource exports means it feels any squeeze more painfully. Global trade fell an annualised 3.7 percent between September 2008 and November last year, its biggest drop since 2001.

Congo's franc has fallen 20 percent against the dollar in less than four months and foreign reserves are at a five-year low. The government is seeking a $200 million bailout from the International Monetary Fund's Exogenous Shocks Facility.

A much-trumpeted $9 billion package of Chinese loans, investment and infrastructure projects in return for Congolese minerals contracts may be cut back to $6 billion, a diplomat in Kinshasa said, partly to appease the IMF which has expressed voiced concern at Congo taking on such huge debts.

Guinea, the world's top exporter of bauxite aluminium ore, had hoped for its own multi-billion-dollar deal with China to build hydropower dams, roads and bridges in return for mines.

Talks have dragged as the economic climate has worsened, hampered by Guinea's instability and a coup last month after the death of President Lansana Conte, said Ahmed Tidiane Diallo, director-general for mining projects at the Mines Ministry.

Gabon, similarly eager to cement a 1.6 trillion CFA franc ($3 billion) contract to develop the 360-million-tonne Belinga iron ore deposit, has accused its Chinese partners of dragging their feet amid the uncertain economic environment. (Additional reporting by Joe Bavier in Kinshasa, Saliou Samb in Conakry, Eric Onstad in London, David Lewis in Dakar, Lucy Hornby and Chris Buckley in Beijing, Moumine Ngarmbassa in N'Djamena, Antoine Lawson in Libreville, Alfred Cang in Shanghai, Mabvuto Banda in Lilongwe, Daniel Wallis in Nairobi; Editing by Louise Ireland and Pascal Fletcher)

© Thomson Reuters 2009 All rights reserved.



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Sunday, January 25, 2009

SUPER AMBITION – Have you seen Bong Mine Lately?!

... It will likely take the better part of 18 months just to get a pellet plant back on line. Best of luck! (see story)

Monday, 26 Jan, 2009 Liberia expects Bong iron ore production in 18 months Reuters reported that the first productions of iron ore pellets from China Union's USD 2.6 billion Bong development project in Liberia is expected within 18 months.

Mr Richard Tolbert chairman of Liberian National Investment Commission said that the full USD 2.6 billion capital investment by China Union would be disbursed over a period of between 8 to 10 years.

He added that the contract signed this week between China Union and the Liberian government foresees 25 years of iron ore production from the Bong deposit, which is estimated to contain 300 million tonnes of low grade ore.

Mr Tolbert further said that "Within 18 months, we will see the first one million tonne palletizing plant up and running." He added China Union had also been granted a license to explore for ore in an area adjoining the Bong deposit, which would open the possibility of increasing the ore resource.

The deal, which beat 9 rival bids, went ahead at a time when many firms have scaled back or postponed African mining projects as metals prices have crashed in the past six months.

Ms Ellen Johnson Sirleaf, President of Liberia, at a ceremony to mark the signing, said that she hoped the China Union deal would encourage other investors to come to Liberia, which is still struggling to recover from a destructive 1989-2003 civil war.

Under its contract to mine the Bong deposit, which lies to the north east of the capital Monrovia, China Union intends to recondition the capital's port and build a hydro power plant to supply the city with electricity. The contract includes a USD 40 million cash signature fee to be paid to Liberia once its parliament ratifies the contract and it is promulgated. This was expected in the coming months.

(Sourced from Reuters)


Tuesday, January 20, 2009

Invading Caterpillars - Lofa/Bong Counties

LIBERIA: Villagers flee invading caterpillars

MONROVIA, 20 January 2009 (IRIN) - Millions of invading caterpillars have forced thousands of Bong County residents to flee their homes and the situation is "getting worse", according to county superintendent Rennie Jackson.

The caterpillars, also known as army worms, have destroyed crops, entered houses and contaminated water sources with their faeces, local authorities say.

"The situation is getting worse," Jackson told IRIN. "Most drinking water sources, including creeks and wells, have been polluted with the faeces of the worms. The number of affected people is in the thousands."

Authorities in Bong County, 150km from the capital Monrovia, held emergency meetings on 20 January and are scheduled to meet with representatives from international organisations on 21 January. Agriculture Minister Christopher Toe has appealed to the international community to help fight the infestation.

Representatives from the ministries of agriculture, health and internal affairs and Liberia’s Environmental Protection Agency are assessing the extent of the damage in Bong County alongside experts from the UN Food and Agriculture Organization (FAO).

The caterpillars invaded Sanoyea District of Bong County on 15 January, rapidly spreading to Zota and Suakoko districts, invading an estimated 31 villages, according to county superintendent Jackson.

Army worms are caterpillars that eventually develop into nocturnal moths. In their larval stage they can be very destructive, attacking cereals and grazing land. This is the first major invasion of the insects in Liberia, according to an 18 January statement by the Agriculture Ministry.

Lost livelihoods
IRIN witnessed hundreds of villagers fleeing in vehicles and on foot to Bong County’s capital Gbarnga, where people are sheltering with extended family members or in public buildings.

Farmers told IRIN they will lose their crops to the caterpillars. Farmer Eric Kollie, who returned to Liberia from Guinea to farm his land in 2007, was in tears as he said: "I saw caterpillars eating up my cassava farms and I am in pain as all of my efforts [of] last year have gone in vain."
"The caterpillars are destroying the rice farms that we were about to harvest," a 50-year-old woman told IRIN. "There is nowhere to go as the caterpillars are still entering our homes."
"The government really has to come to the rescue of the residents as the situation is getting worse by the day," Joe Urey, chief of Zota District, told IRIN. "So far 15 major rice farms have been destroyed by the army worms."

After Lofa County, Bong County is Liberia’s most important food-producing area, growing much of the country’s cassava, eddoes, plantains, bananas and potatoes, according to the Agricultural Ministry.

Entomologists from the Agriculture Ministry have travelled to Bong County to spray affected areas with insecticide but they do not have enough spray, according to Agricultural Minister Toe.
"Additional insecticides, motorised sprayers and other protective gear are urgently needed to combat the situation," Toe told IRIN on 20 January.

Copyright © IRIN 2009.