A couple of weeks ago somebody came round to fix my brand new oven door. Believe it or not, it shattered into a million pieces while I was cooking Sunday lunch. The engineer happened to be Chinese and we got chatting about the Asian boom that is ramping up demand for commodities. I mentioned my South African roots. "Ah yes! The Chinese are very interested in Africa," he said. "And they are not as arrogant as Western governments, so it is easier to forge relationships in Africa."
He was quick to add that this isn’t exactly new. After all, the Chinese first set foot in Africa in the early 15th Century — before the first Europeans! Allegedly there are now 750,000 Chinese scattered across the continent. There are 900 Chinese companies with interests in Africa, and last year they spent $10bn on African infrastructure development.
Who needs human rights when you’ve got gold?
"Less arrogant or less concerned about human rights?", questions Erin. Well certainly, human rights records seem to be lower on the Chinese agenda. You only have to look at the Asian giant’s recent interest in Zimbabwe for proof. Western nations have shunned Zimbabwe for its dreadful human rights record, but not China.
This month a Chinese delegation of 22 experts in mining, exploration and trade visited the troubled nutcase-led African country. And this is just one of many pushes to develop diplomatic relations — Chinese President Hu Jintao recently started a tour across ten African countries.
Quite clearly this recent mining delegation proves that China has its sights on Zim’s gold and platinum deposits. And, Zimbabwe certainly is rich in minerals! Gold is the country’s most important mineral, accounting for roughly 50% of mineral it deposits. But other precious elements include platinum group metals (PGMs) and diamonds. Globally, it has the second biggest platinum reserves after South Africa.
Production of metals may have slipped thanks to the troubles, at current precious metals prices. But their presence is hard to ignore. Clearly what the Chinese are thinking!
Nevertheless Amos Midzi, Zimbabwe’s minister for mines and mining development, is beaming from ear to ear. He is delighted about Chinese interest in exploration and possible investment opportunities.
So too is the mad President Mugabe. He apparently says the "friendship" with China is rooted in a "formidable relationship".
This isn’t the first time that the Chinese have entered Zimbabwe’s mining sector. Last year, they threw some cash at Zimasco Consolidated Enterprises, Zimbabwe’s largest ferrochrome producer.
Aiding local development, creating employment and promoting social stability... this is how the Chinese justify their foray into Zimbabwe. Benign motives, or enlightened self-interest? No prizes for guessing who this question comes from!
Just another round of colonisation?
But Erin is right. Whichever way you look at it, international mining players should be worried about losing a grip on Africa’s vast untapped minerals.
And they are! Switzerland was recently the venue for a meeting of mining’s top dogs, allegedly to consider the uncertain future. The likes of Rio Tinto, Anglo, Newmont and De Beers were present. And rumour has it that some of the world’s biggest players are calling for intervention from the World Bank and UN.
Surprise, surprise, the overriding worry is...Chinese competition. Erin’s words spring to mind. "Isabel, the end of the Western World is nigh."
So what is all the fuss about? Well the Chinese have trotted in offering massive incentives to African governments. They are prepared to build dams, roads, railways and the all-important power stations. They can also offer cheap telecom equipment.
Last year China spent in the order of over 10bn smackeroos on infrastructure in Africa. An aluminium smelter went up in Egypt... a motorway got built in Nigeria... and Ghana has a new telecoms network.
In return Beijing gets access to the continent’s huge untapped mineral reserves. So it can further fuel its already booming economy. Big mining companies can’t be — or perhaps don’t want to be — that generous. After all infrastructure development on the scale the Chinese are willing to offer doesn’t come cheap.
To me that sounds like a pretty good deal for Africa. But is it?
It is just another round of colonisation, says a friend whose parents run a small trading business in several African countries. Only this time it will probably be the final round. Because the coloniser has sufficient resources and technology to drain the continent dry.
Sustainable practices...the thing to look out for
When it comes to environmental and safety standards, the Chinese don’t have the best track record, Erin points out. True, but Western companies aren’t exactly squeaky clean either. Look at the fatalities in South Africa last year!
That said, law suits and environmental legislation has made life much tougher for the big boys. They’ve had to play ball. That doesn’t come cheap either — and now they want a level playing field for all miners. And, they want the UN to mandate that all mining players meet high world standards.
This is essential if mining is to be a sustainable business. What African countries should be doing is reinvesting some of the proceeds from mining into other sustainable projects.
Mark Bristow, chief of RandGold Resources says we must plan and commit for the long term. That means concentrating on realistic business and viable feasibility models. Business should deal with governments not only as regulators but partners.
Botswana is a glittering example in Africa. It has consistently reinvested its mineral revenues for sustainable growth. Prudent management has seen this Southern African company fly (well, relatively speaking). More on this in another issue...
Yes, I’m still keen on Africa but my interest has to be in companies, Western or otherwise, that are focused on the sustainable long term. That may mean waiting a while to see the benefits, but with any luck it’ll be a safer investment.
Keep mining, but sustainably,
Erin and Isabel
P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.
