Tanzania Becoming A New Chinese Province In Africa?

Tanzania’s Expectations Of The Twin Projects

Tanzania Becoming A New Chinese Province In Africa?
Last year the Chinese defense industry delivered 20 type 59G main battle tanks to Tanzania

The coal-iron twin projects that are set to commence in 2015 are estimated to have a turnover of US$ 728.46 billion per year, an equivalent of 7.5 per cent of the current Gross Domestic Product (GDP).

Outspoken Kigoma North legislator Zitto Zuberi Kabwe (Chadema) is among those politicians who support the twin project.

Zitto, chairman of the Parliamentary Public Accounts Committee (PAC), who – in a deeply divided society and an utterly fractured politics – had in the past opposed mining contracts that led to his expulsion in the House on several occasions, says the Chinese-Tanzania partnership is optimistic on the project, saying the production of 600MW could liberate Tanzania from arbitrary and frequent power outages.

“Once the thermal plant starts operation and production, it is evident that a total of 1500MW will be produced from the South Tanzania Electricity Complex as Mchuchuma coal mine is one of the three mega projects in the Southern Tanzania that are being carried out by NDC,” says Zitto.

He says the twin projects has set a new generation of mining regime in Tanzania as the government now has got rights rather than the current situation where mineral rights are offered to private companies that are allowed to explore, develop mines, produce, process and sell the minerals abroad.

“Once a private company is offered a mineral right, then it belongs to it, it can be traded and even being used as security to financial institutions for raising capital. The government only waits for the company to pay royalty, taxes and other related fees. Government participation, as itself or through a state enterprise, is nil. This is the regime existing now,” he says.

Abel Ngapemba, NDC Corporate Affairs Manager, has said that the government will get about TShs. 51.8 billion as royalty, annually in the projects.

“After exploration works that took about six months, preparations for construction of the power plant that is expected to generate about 600MW of electricity will take off before the end of the year 2013,” said Ngapemba.

However, Zitto suggested that NDC pay for 4% more by reinvesting its dividend (or the government reinvest its royalty to be paid) and 25% be IPO to the Dar es Salaam Stock Exchange (DSE) so that the public owns 25%, NDC 24% and the Chinese 51%, adding that Tanzania can even go for more by asking SHC to bring 5% of its stake at IPO.

The price of one ton of coal, according to Ngapemba, is expected to be US$ 86.201 and total revenues from the sale of electricity projected at US$ 285.981 million per year and about US$ 971.28 million will be generated annually from the sale of steel, US$ 424.935 million from titanium and US$ 114.125 million from vanadium.

Critics Against China

As the eastern giant intensifies its quest for natural resources and a gateway to other African states, critics attribute the growing relationship to the ‘Dragon’s hunger’ for raw materials to feed its booming economy as they see China in Africa as an “imperial power” practicing “virtual colonialism”.

In mid-2012 for example, China’s ambassador to South Africa, Tian Xuejun, said China’s investment in Africa of various kinds exceeds US$ 38,244 billion, among which US$ 14.023 billion is direct investment.

“China is not a reliable partner… it will abandon Africa as soon as its needs are met. China is not a philanthropist but rather maneuvering to woo and buy the African good will,” says Rev. William Mwamalanga, a resident of Mbeya City., but acknowledges China’s role in the infrastructural and industrial development as well as the swift cancellation of African debts is undeniably commendable.

Rev. Mwamalanga, an economist and human rights activist, mentioned of the ‘scam and ruin’ of what happened in Zimbabwe: “We heard what happened in Zimbabwe where, according to an article ‘Disappearing Diamonds’ by South African journalist Khadija Sharife, a notorious Hong Kong based company had been exploiting diamonds at Marange fields. This concern should be taken seriously and is evident that some, if not all, Chinese companies are ripping out our resources.”

He argues that by pursuing and practicing non-interference policy, China is indirectly destroying the democratic dispensation in Africa which will eventually lead to massive corruption and human rights violations among other woes.

“After 10 years to come this country, especially the Southern Highlands zone, could be another ‘China State’ full of Chinese people, the Far East country brings in even petty traders (marching guys) who even sell sweets… they see Africa as a paradise for employment opportunities thus making it safe for them to live in,” he added.

He further says failure of the government to set up mineral policy and laws that could govern natural resources and safeguard Tanzanians in employment by those foreign companies could create problems in a few years to come as Chinese mining firms could create slave labour conditions with scant regard for safety or the local culture.

In January 2013 it was reported by international media that Nigerian workers at Lagos-Badagry highway construction site protested because of poor salary and the Chinese company management had no medical facilities.

Mabere Nyaucho Marando, a lawyer and politician with Chadema party argues that the aid China offers is so little to address Africa’s developmental needs and that this aid goes essentially to nations with endowed natural resources.

He accuses China for grabbing exclusively huge natural resources while dumping only sub-standard products in Africa, emphasizing that the only motive behind Chinese activities in Africa is to serve its own national interests.

As people wait for the ‘Dragon’ to spit fire from Mchuchuma coal mine, many wonder whether this could be realistic and questions about due diligence as the Chinese company has no experience in power generation.

According to its official website, SHC is principally engaged in the manufacture and distribution of zinc ingots and chemical products and the Company’s major products are zinc ingots, monoammonium phosphate, lead-sulfide concentrates, zinc oxide, zinc-sulfide concentrates, calcium hydrogen phosphate, liquid ammonia, calcium superphosphate and organic phosphate fertilizers, among others that are being distributed in domestic and overseas markets.

The numbers are huge. Eventually, three million tons of coal, three million tons of iron ore and one million tons of steel will be produced per year.

“The potential of all this is obvious from these numbers. But fulfilling this potential will not be straightforward. And doing so while avoiding all the social and environmental problems than often follow the mining industry will be even harder. Some notes of caution are therefore justified,” said Ben Taylor, former Executive Director of Daraja Development Limited, a non-profit organization based in Njombe.

First, he says, this is still all at an early stage. TCIMR has been given 36 months for “exploration” before project implementation begins, though government leaders suggest things would move more quickly. “Either way, there’s a good chance that we’re still a long way away from any significant employment, coal, steel or power being produced.”

He adds: “When this much money is involved, the project is bound to attract interest from people who are not interested in helping Tanzania, or even in making a legitimate profit. Corruption is a serious risk here. When the numbers given are so inconsistent, this only serves to create doubt. Let’s not forget that initial investment is only half the battle. Keeping things running can be just as big a challenge.”

Part Four