China draws Tanzania into its embrace

[nngu007]

September 23, 2011 12:33 pmby David Keohane




Tanzania is the latest African country to benefit from Chinese largesse – Reuters is reporting it has signed a $3bn deal with Chinese mining company Sichuan Hongda (600331:SHH) to mine coal and iron-ore and agreed a $1bn loan deal with the Chinese government to build a desperately-needed gas pipeline.

Sichuan Hongda's investment involves the joint venture construction of the Mchuchuma integrated coal-mine / thermal power station and an iron ore mine in the Liganga region in southern Tanzania.

A new company, Tanzania China International Mineral Resources (TCMR), has been created to build the mines with the Chinese mining company taking a 80 per cent stake.

The remainder of the company will be owned by Tanzania's state-run National Development Corporation; although there are reports that NDC will be able to increase its stake to 49 per cent once Sichuan Hongda has recovered its original investment.

Tanzania has suggested that the Liganga area is rich in those minerals which China craves, such as iron ore and titanium – recent government estimates have put the figures at between 200m and 1.2bn tonnes.

Mining currently accounts for about two per cent of Tanzania's GDP but Tanzania is hopeful that will increase to 10 per cent by 2025.

The reasons for the Chinese investments are clear and in keeping with China's aggressive push into Africa – Chinese-African trade, increasingly led by private investors, grew from $11bn in 2000 to to $129bn in 2010 with foreign direct investment (difficult to calculate but the Chinese Ministry of Commerce claimed a stock of $13bn in 2010) increasing rapidly as well, according to Renaissance Capital.

The Russian investment bank also notes that mining investments compose the largest portion of Chinese FDI into Africa (29 per cent) and although Africa has a trade surplus with its Asian investor, direct loans between China and African countries often come with conditions that include guaranteeing Chinese companies contractor rights and preferential access.

However, considering Tanzania's chronic power-shortages, the attraction of their loan agreement with the Chinese government is equally clear. The loan will finance a gas processing facility and a gas pipeline from Mtwara, in the south-east of the country, to the capital Dar es Salaam.

That said, China's relationship with Africa is starting to qualitatively change as increasing numbers of Chinese manufacturers choose to locate there.

China's population is aging and supply of low-wage labour may have peaked while economic success and inflation have undermined its competitiveness. That has lead to suggestions, most notably from World Bank president Robert Zoellick, that China, as it moves its labour-force up the value ladder, should start moving the lower-paid manufacturing industry it dominates to job-poor Africa.

But, as Zoellick admitted, actual implementation of the idea might be a few years away – "It's still just a spark in the eye but sometimes that is how you make things happen."

Tags: China-Africa, FDI
Posted in China, Tanzania | Permalink

 

[nngu007]

I hope we will not be like Zambia; Chinese are very arrogant with major discrimination mentality beyond compare...

 

[ubun2]

China's population is aging and supply of low-wage labour may have peaked

Has anyone read this?
So is this about job creation?
When I was in Dar, recently, I went to a place where they were selling african souvenirs, bracelets, little coin purses etc. I was shocked to see that a little coin purse made out of a kitenge design was actually made in china. There are many talented local designers who could have made that little coin purse. But it was not made in Tanzania.

 

[Mwita25]

Chinese are not as profiteers as most western companies are. So I am upbeat that China-Tanzania ties will yield the expected fruits inasmuch as we use these relations efficiently. My only regret is the stubborn corruption conundrum among many government officials who, unabashedly, have been exploiting an information gap to pen down contracts under venal environments for their own gains.

 

[FJM]

Bado sijaelewa uwezo wa kufikiri wa hii government especially Ngeleja. Badala ya kuingia gharama zote hizo kujenga pipeline toka Mtwara hadi Dar es Salaam kwa nini wasijenge a gas infrastructure hapo Mtwara then wakaunganisha kwenye grid ya Taifa kupitia kihansi? DAR kwa sasa kumejaa mimashine na sioni logic (hata kiusalama) kuweko main infrastructure zote DAR! Kama wangejenga mitambo Mtwara isingerimu mabilioni yote haya na hawa wachina wasingemiliki 80% ya mgodi wa MCHUCHUMA. Baada ya mikataba ya Barrick bado tunaongozwa ni vichwa vya wendawazimu.

 

[Mwita25]

Bado sijaelewa uwezo wa kufikiri wa hii government especially Ngeleja. Badala ya kuingia gharama zote hizo kujenga pipeline toka Mtwara hadi Dar es Salaam kwa nini wasijenge a gas infrastructure hapo Mtwara then wakaunganisha kwenye grid ya Taifa kupitia kihansi? DAR kwa sasa kumejaa mimashine na sioni logic (hata kiusalama) kuweko main infrastructure zote DAR! Kama wangejenga mitambo Mtwara isingerimu mabilioni yote haya na hawa wachina wasingemiliki 80% ya mgodi wa MCHUCHUMA. Baada ya mikataba ya Barrick bado tunaongozwa ni vichwa vya wendawazimu.

Tumezingatia mambo mengi sana

 

[nngu007]

Instead of the Pipeline why not upgrade the Mtwara Port to international Standards?

Watasafirisha COAL, IRON ORE, GAS and other Minerals...

Kuliko kutegemea Bandari ya Dar

 

[Bongolander]

Instead of the Pipeline why not upgrade the Mtwara Port to international Standards?

Watasafirisha COAL, IRON ORE, GAS and other Minerals...

Kuliko kutegemea Bandari ya Dar

Nasikia wanataka kujenga nyingine Bagamoyo. So pathetic, inaonekana huko kusini hakuna wabunge wenye uwezo wa kuwatetea watu wa huko.

 

[mtanzania1989]

Tumezingatia mambo mengi sana

Mambo gani hayo ?
Kuna wakati uwa najiulizaga , hivi ni kila wakati maofisa wa serikali yetu huwa wanaongwa au ?
Kama wamekosea , kwa nini "washenzi" wengine wanaendelea kuwatetea tu ?
What does it cost kukubali makosa na kuyarekebisha ?

 

[Mwita25]

Mambo gani hayo ?
Kuna wakati uwa najiulizaga , hivi ni kila wakati maofisa wa serikali yetu huwa wanaongwa au ?
Kama wamekosea , kwa nini "washenzi" wengine wanaendelea kuwatetea tu ?
What does it cost kukubali makosa na kuyarekebisha ?

Nimekusikia, nitawaambia

 

[Geza Ulole]

Instead of the Pipeline why not upgrade the Mtwara Port to international Standards?

Watasafirisha COAL, IRON ORE, GAS and other Minerals...

Kuliko kutegemea Bandari ya Dar

It is cheaper to transport LNG in pipeline than in tankers haswa kwa matumizi ya humu ndani na nchi jirani! Pipeline is the best option kwa sasa haswa ukizingatia dar is the economic center of the country! BTW British gas wako mbioni kujenga gas refinery infrastructure mtwara ikiwemo port kwa kwa ajili ya kusafirisha overseas!

 

[Ngonini]

Hata mimi sijaridhika na kuleta gesi dar na tanga.
1. Kama alivyosema FJM, dar ni sehemu ndogo sana pale ubungo imekuwa kama kuna bom limetegwa maana mpaka panatisha na population ya watu maeneo yale ni kubwa sana. Bado matenki ya mafuta pale kuraaini. Bado majenerata huko tegeta, bado bomba la songasi na bomba tena lingine linakuja. Ni uchafu ni uchafu ni uchafu poor planing.

2. Gesi hiyo kwa asilimia 90 inatumika kuzalisha umeme sasa kwanini tusisafirishe umeme? Kwanini hii isiwe fursa ya kujenga grid ya taifa huko kusini pia?

 

[Geza Ulole]

Hata mimi sijaridhika na kuleta gesi dar na tanga.
1. Kama alivyosema FJM, dar ni sehemu ndogo sana pale ubungo imekuwa kama kuna bom limetegwa maana mpaka panatisha na population ya watu maeneo yale ni kubwa sana. Bado matenki ya mafuta pale kuraaini. Bado majenerata huko tegeta, bado bomba la songasi na bomba tena lingine linakuja. Ni uchafu ni uchafu ni uchafu poor planing.

2. Gesi hiyo kwa asilimia 90 inatumika kuzalisha umeme sasa kwanini tusisafirishe umeme? Kwanini hii isiwe fursa ya kujenga grid ya taifa huko kusini pia?

Tatizo lako unadhani hiyo gasi yoote itaenda katika matumizi ya umeme think out of the box! Imagine potentials za watu milioni 4 kuwa connected na gas kwa matumizi ya nyumbani, magari, viwanda vya mbolea na mahospitali...au imagine gasi hiyo iuzwe Kenya? kipi bora? Isafirishwe kwa tankers as LNG au pipeline? haya ni mambo ya economics kaka hayahitaji ati kiwe hapa kwa vile kimetoka hapa! Kila mtu anajua mikoa wenye more spending capacity Tanzania ni ipi kama tunataka projects zetu ziwe sustainable tuweke siasa pembeni! Mtwara kunahitajika refinery na bandari ya kusafirisha hiyo gesi nje maana hata huo umeme waliozalishiwa na Songas hawajaweza kuumudu so far mradi umekula hasara!

 

[ubun2]

The enemy is not east or west, the enemy is within Tanzania, the enemy is corruption! It is greed of few Tz officials&their friends, remember greed has no bottom and these ppl are not looking after the best interest of the people of Tanzania. Remember when contracts concerning natural resources are signed, the people have to benefit from them not the officials who sign these contracts. Just take a look outside your window today, look at who is benefitting from all the massive scams in the country? One has to think critically about the future generations of the country.