China’s Colonisation of Africa By James Reed

Eager to have secure supplies of resources for its infinitely expanding economy, China is using debt trap diplomacy to seize African raw materials. With the temptation of easy loans, but with conditions, leaders sign up, then find that there is a claim upon their resources, when they cannot repay the loan. Caught in a trap!

https://amp.abc.net.au/article/100267102  

“The end came as a bitter finale to a decades-long tale of intrigue and tragedy.

High up in the mountains straddling the border between Cameroon and the Republic of Congo, Perth-based mining minnow Sundance Resources saw its future extinguished amidst accusations of deceit and corruption.

After more than six months of wrangling and threats of legal action with the Congo government, Sundance boss Giulio Casello discovered to his horror that his former partner, an Australian-domiciled company with Chinese government links, had snared his company's major asset.

Working in tandem with another Beijing-linked group, it had snared the rights to develop one of west Africa's most promising iron ore deposits, the Mbalam-Nabeba project which has been Sundance's main focus for more than 15 years.

"The government of Cameroon has refused to effect our mining licence and now appears to be working with the government of Congo to strip us of our rights to the Mbalam-Nabeba project and grant them to Chinese partners who have done nothing and spent nothing in either country," an incensed Mr Casello thundered.

That's not entirely correct. While those particular companies may not have outlaid any capital in the two West African nations, Beijing long has had an eye on the resource-rich but impoverished countries that dot the Atlantic coast.

And while Sundance has a chequered history in the region — having faced Australian Federal Police investigations over allegations it bribed the Congo President and the current Mines Minister – it is not the only Australian company to suddenly be stripped of its mining rights in the Congo.

A helping hand? Or buying influence?

They call it "debt-trap diplomacy".

Easy credit extended on favourable terms when either no other country will, or global agencies such as the International Monetary Fund insist upon harsh reform measures such as stamping out graft and corruption.

There comes a time, however, when the debts are called in. And it isn't always in the conventional sense of repaying the cash. Sometimes, other means of repayment are required.

China isn't the first nation to employ this as an imperial strategy. But when it comes to Africa, it has turned the tactic into an art form.

Beijing is far and away the biggest lender to Africa. And as the table below shows, when it comes to the Republic of Congo, China has supplied 80 per cent of the nation's borrowings, worth around 25 per cent of Congo's GDP. Neighbouring Cameroon is in a similar situation.

Direct loans aren't the only means of providing cash. One of the more controversial practices is for a handout to be secured against a long-term mining project where Chinese-government-owned firms take all the profit.

In 2017, Guinea negotiated a $20 billion barter deal with China where Beijing promised to provide infrastructure, road networks, sanitation and a university building.

The trade-off was that a group of Chinese-government-connected companies — China Henan International, Chalco and China Power and Investment — obtained mining licences and agreements over two massive bauxite deposits, the raw material for aluminium.

Guinea also happens to be the home of one of the richest iron ore deposits in the world. More on that later.

In the four years to 2018, Beijing clocked up $US164 billion ($218 billion) worth of such deals across Africa. According to Natural Resource Governance Institute, a non-profit organisation, such deals often bypass national governments and budgets and deliver far more to China than to the host country.

Sundance and the heart of darkness

In late December, Sundance Resources and two other Australian mining companies, Equatorial Resources and the privately owned Core Mining Congo, suddenly found themselves out in the cold.

All three had their mining licences stripped from them by the Congo government. All three licences were then awarded to a mysterious company called Sangha Mining, a newly created group with no previous history in the region and no obvious background.

The combined deposits were huge: around 1 billion tonnes of high-grade ore. An incensed Equatorial managing director John Wellborn, a former Wallaby, described the arbitrary actions of the Congo as "unprecedented, unlawful and unfair".

When the dust finally settled last week, the deceit was clear: Sundance's former partner AustSino, with which it had shared detailed plans, had walked away with the prize.

With its new partner Bestway Finance, a private Hong Kong-based company, AustSino plans to develop the mine and build a 510-kilometre railway line and a deepwater port at Kribi in Cameroon, a task that so far has evaded Sundance.

Sundance has been mired in controversy. Five years ago, it was under investigation by the AFP over allegations that in 2006, it gifted shares to a family member of Congo President Denis Sassou Nguesso and a family member of Resources Minister Pierre Oba.

The investigation has yet to be finalised. And the accusations date back to previous management. The entire board of Sundance perished in a plane crash in thick jungle near the Congo and Cameroon border more than a decade ago.

Mr Oba certainly no longer is a fan of Sundance. After awarding the company its mining permit in 2012, he backtracked last week, issuing a statement that said Sundance and others "trample on our laws, do not respect our states, confuse the conventions that we sign with them with our laws".

Sundance boss Mr Casello was gobsmacked.

Guinea, China and Rio Tinto

Three thousand kilometres north of the Congo lies Guinea, home to one of the richest and largest iron ore deposits in the world and, like the Congo, now the focus of Beijing's ruling elite.

The Simandou project, deep within Guinea's interior near the Sierra Leone border, was awarded to Rio Tinto in 1997. But it has yet to yield a single ounce of iron ore. The project has been in constant turmoil with regular outbreaks of Ebola, political instability, high costs and ongoing corruption.

In 2008, Rio had half its rights stripped from it by presidential decree, provoking a long and bitter fight to retrieve them. Israeli businessman Benny Steinmetz, who was awarded the half share in controversial circumstances, recently was found guilty of corruption in a Swiss Court over the deal, a conviction he plans to appeal.

Now back in the saddle, the project is slated to start production by 2025 and often is touted as the Pilbara killer, a threat to Australia's dominant position in the iron ore trade.

The project requires huge investment, close to $20 billion for a 600-kilometre rail link that hugs the border with Liberia and a deepwater port.

Rio, however, has a partner with deep pockets and a lot of influence.

Chinalco, a Chinese government-backed resources giant and the world's third-biggest aluminium producer, holds almost 40 per cent of Simandou with Rio controlling 45 per cent and the government of Guinea the remainder.

Chinalco also happens to be Rio Tinto's biggest shareholder with a 14.99 per cent stake. It launched itself on to Rio during the global financial crisis, when the Australian company was facing a debt-induced crisis.

Then-treasurer Wayne Swan prohibited the Beijing-linked group from owning any more than 15 per cent and banned Chinalco from appointing any directors, thereby limiting Beijing's power over the Australian resources industry.

That didn't stop it from trying to stitch up a deal to secure marketing rights and half ownership of Rio's most valuable Pilbara mines, a deal later scuttled by irate Rio shareholders and, behind the scenes, BHP.

But as tensions between Canberra and Beijing continue to escalate, China's battle for resource security will intensify. If the recent machinations in the Congo are any indication, so too will its determination to shut out Australia and its interests wherever it can.”

 

 

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Friday, 29 March 2024

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