China and Africa
- Thread starter solarz
- Start date
PiSigma
"the engineer"
China thanks them for their contribution to BRI.
This line is currently struggling due to a lack of rolling stock, and operating at a level far below its design capacity. Virtually all minerals from DRC and Zambia travel over road to Dar-Es-Salam/Beira/Durban ports today. An extremely inefficient and costly method of transport. And very risky too.
Pretty much all of that traffic can redirect to TAZARA if the lease works out. But it would require China (or somebody else) to take an additional similar lease on the DRC section of the route as well - from Kolwezi to Sakania - and operate it. None of the three countries' state run railways are capable of handling such volumes at present.
I'm curious...how's Russia able to have the Wagner Group, of all people, running gold mines and such without any problems???
Unless I'm missing something, it seems like they're doing good ol' fashioned resource extraction without incident whereas China's forever forgiving African loans that were low or even no-interest to begin with...sorry for being a Nervous Nelly but I just don't see what China's plan is with these welfare cases: They can't seem to ever do anything properly themselves for some reason but if China takes over then they complain about all the Chinese influence...I mean okay China had no choice but I really don't have any confidence in China's African "friends"...I really think they'll be on the Chinese dole forever (like how thirty years later Poland is still the biggest E.U. welfare case despite moaning and groaning about the E.U.).
Yes yes Russian mercenaries isn't the same as Chinese businessmen but you know what I mean..my understanding is that China's African engagement is for geopolitics and business (export its excess capacity, secure natural resources, and develop new markets) so how's it doing by those criteria?
And any chance of China shipping at least light manufacturing to Africa eventually due to its own shrinking workforce (demographic decline) -- say by 2050? Because that seems to be the hope of all the B.R.I. signatories, to not just get "one-time" infrastructure but Chinese investment, including in the form of relocated Chinese light industry.
Standard third world problem. I won't blame Africa alone on this.
Europe/America learned this lesson early on (by late 1980s) which is why they largely disengaged from Sub-Saharan Africa as soon as the cold war ended. Mobutu was chucked out. A large number of dinosaurs were sent to retire. HIPC loan write off was completed. Having throughly burnt their fingers, they packed their bags and left. In some cases, like Somalia, they were sent packing.
By 2000, the only engagement the west had with Africa was a modest amount of aid and UNHCR run refugee camps.
I mean take TAZARA itself. It was an almost free gift from China at a time when China itself was poor. They later got aid from USA too, for maintenance of this line. End result? Zero.
On the resource front, China is doing excellent, for the moment. In one of the largest mineral resource rich country in the continent, DRC, Chinese companies owns nearly 50% of all mines. It started with the SICOMINES deal (2008) and soon many other Chinese public and private companies have followed.
The associated risk is also rising, fast.
Like, really, really fast. DRC's new president, Felix Tshisekedi picked a fight with China the moment he came to power. First target was CMOC which owns 80% of the giant Tenke-Fungurume mine. It's the world's largest cobalt reserve. Felix gave CMOC a proper shakedown, to the tune of an additional $2 billion, to be paid over the next decade.
At the same time he targeted SICOMINES. The demand on this venture is an eye watering $17 billion, and he wants the Congolese govt share in the venture to be raised from current 38% to 70%! Truly the deal of the century.
Other than DRC, China has decent presence in the oil sector in Angola, Nigeria, Sudan and South Sudan. And a new plan is now afoot in Guinea, for iron ore.
The DRC situation however, is probably becoming a gray rhino for China. Chinese mining companies have poured in ~$10 billion so far into this fragile country. They are far from recovering their investments. Kinshasa knows this and I think the shakedowns will continue.
So far, only Ethiopia has managed to make sizable progress on this front. A good number of Chinese companies have opened production units there. But then they had to start a civil war (of course). Simply put, the business environment in SSA is so poor that China will most likely focus on SSA dead last. If and when Chinese manufacturing moves overseas, it will most likely go to ASEAN, South Asia, North Africa or LATAM long before it goes to SSA. Right now India alone has captured more Chinese electronics assembly investment (Xiaomi, Oppo etc) than entire SSA and India and China aren't exactly sympatico with each other (India isn't a member of BRI).
I think China way overestimated the potential of SSA and poured in too much money in too short time. To give an idea of the scale of Chinese largesse, over the last 20 years, China has funded some 30+ hydropower projects all over the continent. Hydro dams are typically very large deal. They have funded 30+ of those.
One major debtor, Zambia, has already tanked and right now China, IMF and various private lenders are having a slapfight over who will take the fall.
Yes, "it's all so tiresome."
I believe that China had its eyes fully open to barbarian chicanery but felt it had no choice geopolitically and made the best play it could with some really bad "African cards"...kinda like Chinese immigrants having to open businesses in barbaric neighborhoods because that's their only option as Chinese immigrants.
But now how's it possible for Wagner raping and killing their way around Africa to seemingly make money with barely a peep from anyone -- least of all the usually ungrateful Africans themselves???
Thanks for all this; extremely informative. Would really love to know how you figure them Russians ain't losing no money LOL
Funny you mention that.
When the $6.5 billion SICOMINES deal or 'Minerals for Infra' deal was signed in 2008, it had two parts - a $3.5 billion loan to develop the mines and $3 billion loan for infra, payable in tranches linked to production volumes. Around $0.5 billion was disbursed immediately for infra which included a number of roads, including one that connected Kolwezi, where the mines were, to the Tanzania border.
That's where that docu was shot, in 2011, near Kolwezi where our intrepid CREC contractor Lao Yang got his first taste of working in Congo. Pretty much all the copper and cobalt that was shipped out of Congo in the subsequent years, traversed that road.
Congo produces 60% of worldwide cobalt production. If you drive an EV, remember to thank Lao Yang and his crew.
I mean you said it - Russian mercenaries aren't the same as Chinese businessmen. There isn't really much else to it. They are in places like CAR, Mali, Sudan, Libya and Niger, which are in the middle of civil wars and anything goes there. China can't touch those.
The most uncomfortable thing Chinese companies have done in Africa was to hire Eric Prince's Blackwater. They provided security to the Chinese firms' Congolese operations for a while.