China Buys $1.9 Bln of Africa's Ores, Builds Network (Update2)

By Xiao Yu

Nov. 5 (Bloomberg) -- Chinese companies including ZTE Corp. and Huawei Technologies Co. today signed 16 contracts with 11 African nations to buy minerals, build infrastructure and phone networks, in the country's biggest investments on the continent.

ZTE signed two $30 million contracts to provide phone equipment to Lesotho and Ghana, while Huawei will help Ghana set up village phone networks for $30 million and help Kenya set up an Internet-based electronic government network, according to contracts signed today in Beijing.

China, the world's fastest-growing major economy, is increasing investment in Africa, as it seeks more supplies of oil, iron ore and other resources to meet local demand. Chinese President Hu Jintao yesterday pledged to double aid to Africa in three years by extending more credit and waiving tariffs on more of its exports to strengthen economic and political ties.

As many as 1,500 Chinese and African companies discussed investments and cooperation in various industries, while the China-Africa Joint Chamber of Commerce was established to promote trade, said Wan Jifei, chairman of the China Council for the Promotion of International Trade.

China is targeting projects in nations including Angola, Libya and Nigeria in order to satisfy its demand for oil, which has almost doubled in a decade. It has projects in South Africa and Egypt for iron ore and aluminum. China is the world's biggest producer of steel, aluminum and the largest importer of iron ore.

Mineral Contracts

Sinosteel Corp., owned by the Chinese government, today signed a contract to invest in a $230 million ferrochrome mine and smelter project with Samancor Ltd. of South Africa.

China Nonferrous Mining (Group) Co. will build a $200 million copper smelter in Zambia next month to supply China, the company said today. The venture will turn concentrates from Zambia's Chambishi mine into 150,000 tons of the metal annually.

Citic Group, China's biggest state-run company, will build a $938 million aluminum smelter in Egypt. Aluminum Corp. of China, the nation's biggest producer of the metal, is a partner.

Trade between China and Africa this year may rise 26 percent to $50 billion, Zhou Yabin, director for western Asia and African affairs at the commerce ministry, said on Oct. 18. Trade may reach $100 billion by 2010, Premier Wen Jiabao said yesterday.

China is willing to work with African nations to develop new models for energy cooperation that include spending on projects like roads, ports and power plants, Zhang Yuqing, deputy energy bureau director at the National Development and Reform Commission, said on Oct. 18.

Oil Imports

China imported about 38 million metric tons, 763,000 barrels a day, of crude oil from Africa last year, accounting for 30 percent of its total shipments of the fuel, Zhang said. Oil purchases from the continent will expand according to the needs of Chinese companies and the willingness of African producers to sell to China, he said.

Chinese companies are also selling aircraft. China Aviation Technology Imports & Exports Co. will sell two China-built Y-12 regional aircraft to the Seychelles for $10 million.

China Building Material Industry Corp. will build a $55 million cement factory in Cape Verde while China Civil Engineering Co. will build a $300 million highway in Nigeria. Jiangxi International Economic Cooperation Co. will build a $45 million dam in Ethiopia for irrigation, according to today's contracts.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net
Last Updated: November 5, 2006 00:15 EST
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