Bloomberg News

China to Spend $1.9 Billion on Investments in Africa

November 05, 2006

Chinese companies, including ZTE Corp. (000063) and Huawei Technologies Co., signed 16 contracts with 11 African nations to buy minerals and build roads and phone networks, in the country's biggest investment in the continent.

The total value of the contracts is $1.9 billion.

ZTE signed two $30 million contracts to provide phone equipment to Lesotho and Ghana, while Huawei will help Ghana set up village phone networks for $30 million and help Kenya set up an Internet-based electronic government network, according to contracts signed today in Beijing.

China, the world's fastest-growing major economy, is increasing investment in Africa, as it seeks more supplies of oil, iron ore and other resources to meet local demand. Chinese President Hu Jintao yesterday pledged to double aid to Africa in three years by extending more credit and waiving tariffs on more of its exports to strengthen economic and political ties.

``We want to open new avenues for investments for mutual benefits,'' China's Foreign Minister Li Zhaoxing told reporters in Beijing today. ``We want to contribute to the economic development of African countries.''

Demand for Oil

As many as 1,500 Chinese and African companies discussed investments and cooperation in various industries, while the China-Africa Joint Chamber of Commerce was established to promote trade, said Wan Jifei, chairman of the China Council for the Promotion of International Trade.

China is targeting projects in nations including Angola, Libya and Nigeria in order to satisfy its demand for oil, which has almost doubled in a decade. It has projects in South Africa and Egypt for iron ore and aluminum. China is the world's biggest producer of steel, aluminum and the largest importer of iron ore.

Sinosteel Corp., owned by the Chinese government, today signed a contract to invest in a $230 million ferrochrome mine and smelter project with Samancor Ltd. of South Africa.

China Nonferrous Mining (Group) Co. will build a $200 million copper smelter in Zambia next month to supply China, the company said today. The venture will turn concentrates from Zambia's Chambishi mine into 150,000 tons of the metal annually.

`Vital Value'

Citic Group, China's biggest state-run company, will build a $938 million aluminum smelter in Egypt. Aluminum Corp. of China, the nation's biggest producer of the metal, is a partner.

Trade between China and Africa this year may rise 26 percent to $50 billion, Zhou Yabin, director for western Asia and African affairs at the commerce ministry, said on Oct. 18. China's trade with Africa may rise to $100 billion by 2010, Chinese Premier Wen Jiabao said yesterday.

China's relation with Africa is of ``vital value'' to the international community, Ethiopia's foreign minister Ato Seyoum Mesfin, whose country represents the African delegation at the forum, told reporters today.

``It's also a predictable partnership, where one can count on the other, with no political strings, serving the interests of all parties,'' he said.

The leaders of China and African nations ended two days of meetings in Beijing today with a joint statement declaring the formation of ``a new, strategic partnership based on equality, mutual trust and benefits,'' and called on the international community to respect and hold ``diversity of the world.''

Aircrafts, Cement

China and Africa also formulated a plan for broadening political and economic cooperation during the next three years.

China imported about 38 million metric tons -- or 763,000 barrels a day -- of crude oil from Africa last year, accounting for 30 percent of its total shipments of the fuel, according to National Development and Reform Commission.

Oil purchases from the continent will expand according to the needs of Chinese companies and the willingness of African producers to sell to China, said the commission's deputy energy bureau director Zhang Yuqing.

Chinese companies are also selling aircraft to Africa. China Aviation Technology Imports & Exports Co. today signed contracts to sell two Y-12 planes to the Seychelles for $10 million.

China Building Material Industry Corp. will build a $55 million cement factory in Cape Verde while China Civil Engineering Co. will build a $300 million highway in Nigeria. Jiangxi International Economic Cooperation Co. will build a $45 million dam in Ethiopia for irrigation, according to today's contracts.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net

To contact the editor responsible for this story: Mike Millard at mmillard2@bloomberg.net


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