Chinese mining projects in Africa
Chinese inroads into African mining began in late twentieth century for instance in 1997 Sinosteel acquired Dilokong chromite mine located in Mpumalanga province of South Africa. African mining projects are of importance as the minerals unearthed are the fuel for Chinese manufacturing sector. The continent boasts of huge amounts of mineral resources for example 90 percent of platinum and cobalt, 50 percent of gold, 35 percent of uranium, two-third of manganese and finally 75 percent of coltan are found there.
These minerals are essential as platinum and cobalt is used in the automobile industry, gold utilized in the production of glass, uranium employed for the operation of nuclear power plants and lastly coltan is an essential component of electronics and mobile phones.
Mining Projects:
Source: https://www.mining.com/feature-chinas-scramble-for-africa/
China has expanded its mining footprint in Africa through the 2006 strategy of “two resources, two markets” which means that imports are utilised for domestic production. As can be seen in the bar graph above, in 2006 Chinese firms dealing in mining were only a handful but in the 10-year period, it has grown many folds as there are more than 120 Chinese headquartered firms mining in Africa. Base and precious metals occupy the largest share among all the extractive projects.
Source: https://www.mining.com/feature-chinas-scramble-for-africa/
The map above explicitly displays how China has enlarged its involvement in the African continent. For instance, in 2006 Chinese firms were conducting mining operations in only three countries and by 2015, they have thickened their participation in Southern Africa and are making inroads in Northern Africa.
The most important minerals extracted by Chinese firms across the continent are copper, bauxite, and cobalt.
· Copper is an essential component for the electric vehicle market as it is used in batteries, windings and electric motors use copper rotors. The electric vehicles are driving China’s demand for copper as they utilise as much as four times of the metal as compared to a conventional combustion engine vehicle. It is mainly produced in Democratic Republic of Congo (DRC) and Zambia. Shanghang-based firm Zijin controls the Kamoa-Kakula copper deposit located in Kolwezi district of Lualaba. NFC Africa, a mining company in Zambia currently extracting copper at Chambishi main mine and west mine is largely controlled by Chinese Non-Ferrous metals Company.
· Bauxite is used in aluminium production which is important for the automobile sector. It is mainly extracted in Ghana and Guinea as far as Africa is concerned. Chinese firm Sinohydro will invest about $2 billion to create the infrastructure from scratch for mining in the Upper Guinean Forest. China in 2017 made a $20 billion deal which allows China Henan International Cooperation Group, China Power Investment Corporation mining rights in exchange for infrastructure development in the country. China’s domestic reserves of bauxite are not enough to fulfil its demand. Secondly, pollution concerns at home have led the Chinese firms to invest abroad.
· Cobalt is used to build lithium-ion batteries for electric cars. DRC dominates the cobalt market as 70 % of the metal is found there. Chinese mineral mining firm China Molbydenum Corporation acquired US based Freeport-McMoRan for $550 million and with it, now controls the Kisanfu copper-cobalt deposit. China also controls half of the cobalt resources in the country and with it, dominates the supply. With the demand for electric cars set to grow over the coming decade, the demand for cobalt will also rise. So, investing in cobalt is important if China intends to dominate the automobile sector.
What does China gain?
Beijing is investing billions of dollars in Africa mining projects as it would allow access to key minerals which are essential for the Communist Party to keep up the economic growth rate and maintain its grip on power. Secondly, China’s resources are being depleted and it cannot on its own, fulfil the demand for the minerals and hence relies on Africa to increase supply and match the demand. The key minerals such as cobalt and copper which have been depleted back at home, are being extracted in Africa and exported to China. This permits the dragon to fix the supply crunch at home and utilize the raw materials for finished products.
Africa is an underdeveloped continent with huge untapped natural resources which is being duly exploited by the dragon to fulfil its appetite for raw materials. Through its investments the dragon can sell its idea of win-win cooperation, a way to foster close relationships with Africa. Partnering with poor, resource rich African countries is a method to increase the supply of the required minerals, which would be utilized for final products such as cobalt for manufacturing batteries of electric vehicles.
Investing in infrastructure in return for mining rights helps the dragon further its grip on the poor continent in two keyways. Firstly, mining rights allows Beijing to extract natural resources in Africa where environmental laws are not as strict empowering Chinese firms to continue with ecocide behaviour despite the pledge to shift to a green economy. Secondly, infrastructure investment is beneficial in the sense that it permits Chinese companies’ dominance in the African market. Overall, China is benefitting immensely from its engagement in Africa as it not only gets to exploit untapped natural resources but also meet the requirements of minerals at home.
What is the impact on Africa?
The impact of Chinese inroads in the African continent differs depending on what one looks at. The impact is positive in the sense that the poor region has benefitted from the access to financial resources. Beijing brings much-needed capital as well as technology for mining operations. China has enabled African countries to mine minerals out of the ground and export it abroad, something which could not have done on its own. China enables Africa to increase the economic size through exports and to further integrate into the global economy.
On the other hand, if we look at the social impact then it is negative as Chinese firms bring workers from the homeland and as a result, they do not generate much employment for the locals. Also, Chinese led mining projects in Zambia for instance have been inculpated of practicing of poor safety standards, being hostile to the trade unions present in the country. The workers have very long shifts and were threatened with dismissal if they refused to work in dangerous conditions according to a report by Human Rights Watch.
Africa’s economy is increasingly getting linked to the Chinese economy, slowdown in Beijing led to slower growth in Africa for example decline in China’s growth rate in 2019 affected the demand for cobalt and thereby had a negative effect on the cobalt industry in DRC. China through mining projects in Africa is utilizing the region to fulfill its demand for raw materials and exporting cheap goods in return which could be called a neocolonial practice. So, if we look at it from this perspective then China is not different from other powers which descended upon the African continent centuries ago.
Conclusion:
Beijing has stepped up its game in Africa through investment in mining projects and infrastructure development. The focus here has been on minerals particularly copper, bauxite, and cobalt. China benefits from such investment through access to essential minerals which are needed to keep the economy running. In addition to that, mining allows the dragon to meet the demand at home where supply is drying up fast. Secondly, China invests in infrastructure in return for mining rights in Africa and thereby controls the kind of infrastructure is created.
As far as impact on Africa is concerned, no one can deny that the region is benefitting immensely from Chinese capital and with Beijing’s help it is able to increase its exports and develop into a modern economy. However, if we consider the social impact, it has been negative due to two reasons. One being China brings workers from the mainland and the mining projects does not generate as much employment for the locals as is expected. Secondly, China has been accused of practicing poor safety standards, forcing workers to toil for longer hours.
End Notes
1) https://link.springer.com/article/10.1007/s13563-020-00233-4
2) https://www.dnb.com/business-directory/company-profiles.dilokong_chrome_mine_(pty)_ltd.9c96d2825992938b0c24564b23143899.html
3) https://miningindaba.com/Articles/chinese-investment-in-african-mining-what-you
4) https://www.mining.com/feature-chinas-scramble-for-africa/
5) https://www.saiindustrial.com/insights-into-chinas-recent-investments-in-mineral-resources-globally/#:~:text=CHINA'S%20TWO%20RESOURCES%2C%20TWO%20MARKETS,reserves%20and%20strengthen%20commercial%20position
6) https://www.nsenergybusiness.com/news/china-drc-mining-sector-acquisition/
7) https://www.reuters.com/article/us-zambia-mining-idUSKCN1L71P7
8) https://foreignpolicy.com/2020/01/28/china-investment-bauxite-mining-ghana-infrastructure/
9) https://www.alcircle.com/news/the-china-guinea-20-billion-bauxite-deal-might-be-a-risky-loan-for-guinea-nrgi-52212
10) https://www.scmp.com/news/china/diplomacy/article/3115249/chinese-companies-are-betting-heavily-democratic-republic
11) https://www.reuters.com/article/sponsored/copper-in-chinas-economy
12) https://www.woodmac.com/news/opinion/china-metals-outlook/
13) https://www.bakermckenzie.com/en/insight/publications/2020/01/china-partnership-with-african-mining-sector
14) https://www.miningweekly.com/article/chinese-investment-underpins-africas-mining-especially-in-zambia-2019-08-28
15) https://www.intechopen.com/books/regional-development-in-africa/china-africa-investments-and-economic-growth-in-africa
16) https://www.mining-technology.com/features/blessing-curse-understanding-social-impact-chinese-mining-africa/
17) https://www.econstor.eu/bitstream/10419/171297/1/1004709439.pdf
18) https://www.spglobal.com/platts/en/market-insights/latest-news/metals/120120-chinese-dominance-of-drc-mining-sector-increases-economic-dependence-mines-chamber
19) https://www.africalegalnetwork.com/zambia/news/silk-road-or-dragon-path-the-impact-of-chinese-investment-in-zambia/
Pic Courtesy - Ninno JackJr at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
