China-Africa: The World Bank will take three years over a project – the Chinese will get it going in three months
BANKERS in South Africa recognise the immense threat posed to them by Chinese investment in Africa’s commodities market.
“We have a Chinese shareholder and we’re hoping to benefit from deal flow. But I’d say there’s a level of concern in the banking community,” says Brad Breetzke, head of project finance at Standard Bank.
The concern is the swiftness with which Chinese investors scoop up business in Africa quite simply by offering turnkey type solutions to African governments. Martyn Davies, of Frontier Advisory, says: “The World Bank will take three years over a project – the Chinese will get it going in three months.”
China’s engagement in Africa started in 2000 after a decision was taken in Beijing to secure key commodities in African states. Since then, Exmin Bank has offered investments worth US$4,4bn to Angola, where 35 Chinese companies are currently operating. But Chinese companies don’t just build mines: they build schools, railways and airports. Moreover, they do it quickly. Very quickly.
Some $3,5bn in investment has been offered to Gabon – hardly top of any SA mining firms’ places to invest – in an effort to secure its abundant iron ore reserves, mostly notably at Belinga. In addition to Belinga’s iron ore mine a deep-water port and railway is also being planned.
Critics of the Chinese point to its lax environmental standards and poor labour practices, but Davies says the Chinese perspective is they don’t see why labour should get paid more in Africa than in China. “The western press has adopted an emotive line regarding Chinese investment in Africa but European and US investment behaviour has been the same,” says Davies.
There are now signs the World Bank and China are beginning to share investments, with both considering co-operation on the Bui Dam on Ghana’s Volta River. It’s one of the first examples of co-operation where a recent dry season resulted in the river’s reserves falling that, in turn, led to power disruptions for Gold Fields, AngloGold Ashanti and Barrick.
(miningmx)