BEIJING, November 17, SinoCast -- The Congo copper and cobalt project under the wing of Sicomines Co., Ltd., marking a milestone investment made by China in Africa, has not gone as well as industry analysts have predicted.
Sicomines is an international mining company jointly formed by a consortium, composed of three Chinese companies, and Gecamines Company, which is designated by the Democratic Republic of Congo.
In the agreement signed between the two sides, the Chinese consortium vowed to invest USD 9 billion in building highways, railways, hospitals, schools, and dams, and developing mineral resources.
In return, the Congo side should transfer the right of exploiting the copper and cobalt project in southeast Katanga, Congo, to these Chinese investors.
The Chinese consortium has been entitled to develop up to 10.6 million tons of copper ore reserves, with about 6.8 million tons proven. In addition, it has gotten an access to 425,000 to 625,000 tons of cobalt core as well as all the other mineral resources that can be developed.
The exploitation expenditure is estimated at USD 3 billion. Although the Congo government promised that Chinese investors could obtain 19 percent return on investment, the Chinese side has now been confronted with huge risks, because of suspending taxes, internal return rate, accounting rules, declining copper ore prices, and so on.
In fact, Chinese companies, which have started overseas expansion in recent years, have paid much attention to Africa which boasts abundant energy and resources.
In September 2011, Minmetals Resources Co., Ltd. (SEHK: 01208) announced that its wholly-owned affiliate Album Enterprises would buy all common shares issued by Anvil Mining Ltd. (ASX: AVM; TSX: AVM), a copper mine developer in Congo.
The buyer will pay in cash and these shares are evaluated at approximately CAD 1.33 billion, said sources. The price may be fixed at CAD 8 apiece, 39 percent higher than CAD 5.77, AVM closing price on the Toronto Stock Exchange on September 29, they added.
The cash will come from financing loans offered by a wholly-owned subsidiary of China Minmetals Non-Ferrous Metals Co., Ltd., the controlling shareholder of Minmetals Resources, and cash reserves of the company itself.
Notably, the Chinese Vice President Xi Jinping held a talk with Motlanthe, his South African counterpart, in the Great Hall of the People on September 28.
The Chinese vice president stressed that China would enhance economic and trade cooperation with South Africa and expand the cooperation between them in energy and finance sectors in the next decade.
In order to contribute more to long-term peace in Africa and mutual prosperity, China is willing to deepen cooperation with South Africa and fully implement conclusions made at the fourth ministerial meeting of the Forum on China-Africa Cooperation, according to Xi.
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