China remains leader of FDI inflows to SADC in 2009: report

09:31, December 18, 2010      

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China remained the leader in terms of Foreign Direct Investment (FDI) into the Southern Africa Development Community (SADC) region during 2010, including signature of a new 79 million U. S. dollars agreement with Angola to supply equipment for the rehabilitation of the Benguela Railway (CFB), a report has said.

According to the report by SADC Today issued on Friday, Southern Africa continues to strengthen its profile as an investment destination, attracting major inflows from China in the mining, agriculture, telecommunications and manufacturing sectors.

Under the contract between the CFB board and the Chinese Machinery Equipment Import and Export Corporation (CMEIEC), the Chinese provided train engines, rail wagons and trucks to be used to resuscitate the Benguela line.

South Africa’s cooperation with China got a further boost in August when President Jacob Zuma and Chinese President Hu Jintao signed the Beijing Declaration during Zuma’s state visit to China, the report said.

The declaration outlined 38 cooperation agreements between the two countries, which ranged from political dialogue, trade, investment, mineral exploration and agriculture to joint efforts in the global arena, such as at the United Nations and the Forum on China-Africa Cooperation.

Chinese and South African companies signed more than a dozen agreements covering investments in railways, power transmission, construction, mining, insurance, telecoms and nuclear power.

“China, in this spirit, will encourage its enterprises to increase investment in South Africa's manufacturing industry and promote the creation of value-adding activities in close proximity to the source of raw materials,” the declaration reads.

Under the agreement, companies from both countries would be encouraged to explore cooperative opportunities in infrastructure construction projects such as roads, railways, ports, power generation, airports and housing.

The two governments agreed to create conditions supportive of cooperation between Chinese and South African energy companies while also considering third-party involvement in electricity, nuclear energy, energy efficiency and energy infrastructure projects.

Other Chinese investments in SADC included some 37 million dollars injected by China’s Jinchuan Group to revive a Zambian nickel mine which had closed in 2009 due to poor international mineral prices.

The mine is located in Mazabuka, south of Lusaka, and was previously run by Australia-based Albidon which halted operations in the face of plummeting nickel prices and the global financial crisis.

It currently produces 900,000 metric tons of nickel concentrates per year but has set a target of 1.2 million tonnes per year by 2012.

A group of Chinese businesspeople announced in August that they intended to invest 13 billion dollars in a number of projects in Mozambique over the next five years. The projects include an industrial park and a car assembly plant.

The Mozambican government and the Chinese investors signed two Memoranda of Understanding (MoU) which lay the basis for the implementation of these projects.

Brazilian mining giant Vale also expressed interest in exploiting phosphate deposits in the northern Mozambican province of Nampula.

Vale plans to submit a project for a viability study to the government. The study will begin in 2011 but the mining of phosphates is not expected to start until 2014.

The Brazilian firm is already involved in a major coal mining project at Moatize, in the western province of Tete. The open cast coal mine in Moatize should begin production next year. Chinese companies have been involved in construction of the railway to rehabilitate access to the Moatize coal deposits.

Namibia also reported “noteworthy” investment in uranium mining activities, citing the Langer Heinrich and Tjrekkopje mines.

“These investments have created hundreds of direct and indirect jobs for Namibians and brought about new business opportunities through the procurement of goods and services from local suppliers,” President Hifikepunye Pohamba said during a State of the Nation address.

Zimbabwe announced in April that it had signed a US$400 million agreement with China's Sinohydro to expand its Kariba hydroelectricity plant at a time when power cuts are threatening to derail the country's economic recovery prospects.

Noah Gwariro, the managing director of the Zimbabwe Power Company, the generation arm of state utility Zimbabwe Electricity Supply Authority (ZESA), said Sinohydro would add two 150 megawatt (MW) units at Kariba.

China is expanding investments into southern Africa at a time when other traditional sources of FDI are holding back citing the impact of the global financial crisis. The Chinese economy was largely unaffected by the global economic downturn of the last two years.

Source: Xinhua
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