After years of stagnation due in part to the coronavirus pandemic, China’s growing demand for the metals and minerals that support its industry is fueling a boom in Chinese investment and construction deals in Africa.
In African countries that have concluded Belt and Road cooperation agreements with China, construction contracts from China increased by 47% last year compared to 2022, and investment increased by 114%, according to a report by the Chinese government. According to the Belt and Road investment report, the Griffith Asia Institute at Griffith University in Brisbane, Australia.
The increase in 2023 made Africa the largest recipient of Chinese involvement worth US$21.7 billion, overtaking Middle Eastern countries, which showed involvement of US$15.8 billion.
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Meanwhile, East Asia’s Belt and Road countries have increased their investment from China by 94%, reaching US$6.8 billion in 2023. This report was produced in collaboration with the Green Finance & Development Center at Fanhai International School of Finance. Fudan University in Shanghai.
Officials say they expect Chinese investment in Africa to continue its upward trend, but it will not reach the same level as a decade ago.
Driving the recovery will be competition for raw minerals, which are essential to the global transition to green energy.
The key players in this transition are the electric vehicle, battery and renewable energy industries, which the report’s author and director of the Griffith Asia Institute, Professor Christophe Nedpil Wang, calls the “new big three”.
He said the surge in Belt and Road investment in Africa is “driven by the metals and mining sector.” In Botswana, it acquired the Kemakau copper mine owned by China’s MMG, which is managed by the state-owned China Minmetals Corporation. It was acquired by Cuprous Capital for US$1.88 billion in November last year.
Other resource-rich African countries, including the Democratic Republic of the Congo (DRC), Namibia, Zimbabwe and Mali, are all in a hurry for China to secure minerals, especially raw materials such as cobalt and lithium, which are essential for making electric vehicle batteries. I have witnessed it. And electronics.
Chinese companies are not only leading the way in critical minerals, but also winning energy, railway, road and real estate construction contracts in African countries.
Nedpil Wang said these construction contracts are being facilitated by the transport industry, such as in Tanzania, where Chinese companies are building major railways.
Last year, China Civil Engineering Construction General Corporation and China Railway Construction General Corporation agreed to build the sixth and final section of the 2,561 km (1,591 mile) Standard Gauge Railway (SGR) in Tanzania worth $2.2 billion, according to a Chinese newspaper. obtained a second contract. Global investment tracker by American Enterprise Institute.
The Chinese company will build a 506-kilometre line linking the town of Tabora in the country’s midwest to Kigoma on Lake Tanganyika, near the border with Burundi and the Democratic Republic of the Congo. In 2021, the two Chinese companies were also appointed to construct the fifth phase of the approximately 250-kilometre SGR line connecting Ithaca town with Mwanza, Tanzania’s second largest city.
Meanwhile, Chinese companies including China National Petroleum Corporation, China Energy Engineering Corporation and China Communications Construction Corporation were awarded $930 million worth of construction projects in Tanzania last year. Additionally, Chinese company Weihai Huadan is investing US$110 million in the construction of an East African commercial and logistics center.
Nedpil Wang, who is also director of the Green Finance Development Center, said the top countries for investment and construction involvement were Tanzania, Democratic Republic of Congo, Nigeria, Botswana, Algeria, Zimbabwe and Ethiopia.
Billions of dollars are being poured into lithium production and processing, particularly in Zimbabwe, and huge investments by Chinese companies in the Democratic Republic of the Congo, the world’s largest producer of cobalt and a major source of copper.
China says Chinese companies JCHX Mining, China’s largest molybdenum producer China Molybdenum is used to make alloys, and the world’s largest battery producer Contemporary Amperex Tech invested more than US$4 billion in the Democratic Republic of Congo last year announced plans to do so. Global investment tracker data.
China’s construction plans in Africa, especially infrastructure upgrades and construction, will increase in 2023 Photo: Xinhua alt=China’s construction plans in Africa, especially infrastructure upgrades and construction, will increase in 2023 Photo: Xinhua>
In Algeria, Chinese companies including National Construction Engineering, China National Petroleum Corporation and China Communications Construction were awarded $1.2 billion worth of construction projects last year.
Nedpil Wang predicts a further recovery in Belt and Road investment and construction contracts in 2024. He said there is a clear need for investments to boost growth to support the green transition both in China and Belt and Road countries.
“This brings great opportunities for mining and mineral processing trade, technology trade such as electric vehicle manufacturing, battery manufacturing and green energy,” Nedpil Wang said.
He also said that continued post-COVID-19 investments by the World Bank, including development finance institutions such as the World Bank, Asian Development Bank, and AIIB, will provide infrastructure opportunities for Chinese contractors. He said he was deaf.
However, the Griffith Asia Institute report only talks about construction and investment and does not comment on Chinese funding.
“Once China reopens its economy, investment will resume, but lending will always be “It’s a much more important part of China’s financing.”
Sub-Saharan geoeconomic analyst Ali Khan Sachu said Chinese investment was recovering after a period of stagnation.
“China’s engagement with Africa is naturally not going to be smooth sailing, but is long-term and strategic,” he said.
“China increased its lending to countries that were keen to pay down their debts as a kind of quid pro quo during recent tough times.
“We expect it to accelerate further as African countries have easier access to finance.” [such as Ivory Coast and Benin Eurobonds] And China continues to take a long-term view.”
Mark Borland, senior credit research analyst at REDD Intelligence, said China’s lending to Africa is likely to increase but remain well below 2010-15 levels.
He said the main reason for this is that most African governments currently manage fairly large debts to domestic and foreign creditors and are unable to absorb much new financing.
“We therefore expect new debt payments to countries that already owe large sums of money to Chinese creditors, such as Angola, Cameroon and Kenya, to lead to principal repayments on previous loans,” Borland said. said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative news organization on China and Asia for more than a century. For more stories from SCMP, explore the SCMP app or visit SCMP on Facebook. twitter page. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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