Tanzania Becoming A New Chinese Province In Africa?

The Mining Summit 

Tanzania Becoming A New Chinese Province In Africa?
Chinese traders have been accused of flooding African markets with inferior Chinese goods

Most people doubt about Chinese companies which are said to have a poor record when it comes to delivering on commitments in Africa.

These reasons seem to be the dominating agendas in the coming Central and East Africa Mining Summit which is to be held in London between 20th – 23rd January, 2014 that will attract participants from the extractive industry, particularly from the region.

According to the tentative programme of the summit, a number of papers will be presented including ‘Investment and risk: examining the risks and rewards of mining in Central and East Africa; Examining how relationships with state mining companies can be optimized: a case study on the role of Gécamines in the Democratic Republic of Congo; Understanding China’s increasing political role in Africa and in mining in Central and East Africa; and Examining strategies to secure and improve power supply and lower the costs of mining.’

Tanzania will be represented by Stephen Masele, Deputy Minister for Energy and Minerals, who will present a paper on ‘Assessing government policies in Central and East Africa: how do governments plan to support mining in the region?’; while Edward Johnstone, Independent Power Consultant from Tanzania will present a paper on ‘Assessing solutions for mining companies: from coal to solar power, how can you make the best choice for your project or operations?’

Other papers to be presented on the first day will be ‘How should mining companies and governments invest in expanding power capacity?; Managing resource nationalism and political risks in East and Central Africa; Assessing how geopolitical risks in Central and East Africa will impact mining companies in the future.’

The programme show that invited speakers in the summit will be Richard Musukwa, Deputy Minister for Mines, Energy and Water Development from Zambia; Martin Kabwelulu Labilo, Minister for Mines from Democratic Republic of Congo; Najib Balala, Minister for Mines from Kenya; George Simbachawene, Deputy Minister for Energy and Minerals from Tanzania; and Irene Muloni, Minister for Mines from Uganda.

Trust The Dragon 

While many in the West view Africa as a land of poverty, the Chinese see the continent as an almost limitless business opportunity. It is not surprising when on March 25th 2013, Beijing and Dar es Salaam signed a total of 17 deals worth US$ 13.355 billion which the authorities say the huge funding will cover many strategic economic areas and will have a direct impact on the national budgets at least for the coming two fiscal years.

These deals include the multi-billion dollar modern port project to be constructed in Bagamoyo to service the Great Lakes region that is scheduled to be completed by 2017. The new Bagamoyo port will be designed to handle 20 million containers a year, compared to the annual 500,000 containers that pass through Dar es Salaam.

Analysts say that China stands to gain from the new port as it would facilitate China-bound shipments of minerals from neighbouring landlocked countries via the Indian Ocean. It is predicted that the new port will attract a huge shift in trade from Mombasa – which handles 600,000 containers a year – ushering in big changes in how the region does business.

The bilateral deals call for China to commit $500 million in 2013 for starting the port construction, which will include the building of a new 34-kilometre road joining Bagamoyo to Mlandizi and 65 kilometres of railway connecting Bagamoyo to the Tanzania-Zambia Railway (TAZARA) and Central Railway line. Two years ago, China arranged a $1.3 billion loan to the Tanzanian government at an interest rates of just three percent to finance the construction of 524km Mtwara-Dar es Salaam gas pipeline.

Last October Tanzania signed contracts worth US$ 1.639 billion with Chinese companies to construct power plants and housing units in the country, deals that mark China’s growing economic presence in Tanzania.

The contract signing ceremony, which was witnessed by the Tanzania premier Mizengo Pinda, took place in Guangzhou, China, and includes a US$ 667.755 million contract that was awarded to Tebian Electric Apparatus Stock for the construction of a 400 kV power transmission line, and other US$ 667.755 million deals with China Railway Jianchang Engineering Company and China Poly Group Corporation to develop residential and commercial property.

In May 2013 Tanzania signed a framework agreement with China Merchants Holdings for the construction of a new port, special economic zone and railway network that could involve more than US$ 9.53 billion.

Being the world’s second largest economy, China has more than built trust in Tanzania and other African countries that they dismiss allegations related to the Dragon’s quest to African raw materials.

“The investors are committed to stimulating the development of transport infrastructure and this will also necessitate the building of new and strengthening the current power transmission lines,” Dr Chrisant Mzindakaya, NDC Board of Directors chairman, said during the signing of agreement in 2011, adding: “My expectation is that your negotiations today will lead to a win-win situation not only for our two institutions but for the prosperity of our two friendly nations.”

SHC Chairperson, Lin Conglong, said his company’s decision to invest in Tanzania was motivated by, among other things, traditional relations between Tanzania and China through the late Mwalimu Julius Nyerere and Mao Tse Tung.

China-Tanzanian joint venture cooperation started in the 1960s and has been developing rapidly in recent years. It’s said that Tanzania is China’s largest aid recipient country in Africa.

At present, there are eight Sino-Tanzanian joint ventures established in Tanzania. Among them Tanzania-China Friendship Textile Co Ltd, which was reorganized on the basis of the former Chinese-supported Friendship Textile Mill by using the interest-subsidized preferential credit provided by the Chinese government, serves as a successful example for mutually beneficial cooperation.

According to the statistics from Tanzanian Investment Center, by the end of August 2012, there have been more than 300 Chinese companies investing in Tanzania’s infrastructure, agriculture, manufacturing and SME development with a total registered capital of over US$ 971.28 million.

During the contract signing ceremony of the JV agreement between Sichuan Hongda and NDC on September 21st, 2011, Tanzania’s Vice-President Dr Mohammed Gharib Bilal, was quoted as saying that the production of power and iron and steel from Mchuchuma and Liganga projects will also lead to development of key infrastructures including the Mtwara Port, the Mtwara to Mchuchuma-Liganga Railway and power transmission lines, especially that will link Mchuchuma power station with the national grid.

“Apart from serving the projects, the infrastructure so developed will help to spur further development of other economic activities along these infrastructure corridors… It is thus clear that implementation of these two projects is at the heart of Tanzania’s future economy that will uplift the majority of our people from poverty; to the level of middle income economy as hoped for in our National Vision 2025,” he said.

However, President Jakaya Kikwete recently said that he would like to see all industrial projects, especially the Mchuchuma and Liganga, start before he retires, assuring Tanzanians that he will use his presidential powers to ensure that the giant projects for establishing basic industries geared to tap huge Liganga iron ore and Mchuchuma coal reserves begin before 2015.

“The government aims at turning NDC into a catalyst for industrialisation in the country. The projects for industrialisation based on utilisation of Liganga iron ore and Mchuchuma coal reserves, which have been in the country’s talks for many years, must start before I retire,” he was quoted as saying.

President Kiwete reiterated his promise on his visit to Liganga in mid-October, saying he was quite sure the projects will commence soon.

It is said that the projects are yet to start waiting for the Environmental and Social Impact Assessment (ESIA) to be verified after the process was done by environmentalist and former Ludewa Member of Parliament, Professor Raphael Mwalyosi. TCIMR is now set to begin its activities in the year 2015.

 

By: Daniel Mbega