Article From Business Spectator:Africa in China's sightsThe...

Article From Business Spectator:


Africa in China's sights
The arrest of the four Rio Tinto executives suddenly has us looking at China’s global actions in a different light. We now realise that the Minmetals acquisition of OZ Minerals assets was part of a massive play by the Chinese to gain a stranglehold on the global zinc market (Chinese whispers, June 30). Had China gained control of Rio Tinto as was envisaged with the ill-fated deal, they would have been well on the way to controlling the iron ore market.

We are seeing the beginnings of an ice cool set of long-term Chinese strategies being undertaken in Zimbabwe and in South Africa to gain a major stake in the platinum market. Platinum is vital for the global automotive and telecommunications industries and it would be a huge coup if China became the main player over the next decade.

Tendai Biti, who became Zimbabwe finance minister after his treason trial was suspended, has declared President Robert Mugabe a "dictator" and has worked closely with the leader of the Movement for Democratic Change, Morgan Tsvangirai. Biti was a key negotiator of the power-sharing deal.

Given the Zimbabwe mess, which is made worse by various global trade and sporting bans, Biti has few options. He must do a deal with the Chinese over Zimbabwe’s extensive platinum reserves in exchange for buying credits and cash – China ignores the bans.

According the Zimbabwe Independent, Zimbabwe and China have signed a cautioned memorandum of understanding (MoU) with the Exim Bank of China on the anticipated $US5 billion platinum mining deal between the two governments. The platinum reserves in Zimbabwe are extensive, but hard to extract.

The Chinese are also making friendly noises to the South African government seeking access to platinum reserves currently held by leading South African companies who may not be playing under the changed South African rules regarding ownership. South Africa dominates the platinum industry. These are early days, but watch this space.

One of the problems the Chinese have is the ability of their executives to work with locals in mining development. Had China gained control of Rio Tinto, China would have used Rio Tinto's skills to work with the Africans.

However the wash-up is that future attempts by China to gain control of Australian resources will be watched more carefully, so they will swing hard to other countries and take the political risks.