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China’s pledge to invest in South African mining infrastructure

Among the many partners in Africa, South Africa has taken the lead in signing a Memorandum of Understanding on Inter-Government Cooperation for the “Belt and Road Initiative” with China and the two countries have jointly deepened cooperation under the “Belt and Road Initiative” framework.

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South Africa and China have cooperated diplomatically for about 20 years, with bilateral trade volume reaching $39.17 billion in 2017. South African President Matamela Cyril Ramaphosa plans to attract $100 billion in investment to improve the economy within five years, some of which will come from mining projects.

Chinese investors have agreed to build a $10 billion metallurgical complex in 2019. The complex will include a stainless steel plant, a ferrochrome plant and a silicomanganese plant, there will be many mining machines, such as ore crushing equipment. In addition, a $90 million open-pit mining project in Limpopo will produce hard coal and thermal coal.

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Since 2009, China has surpassed the United States and has become the African largest trading partner for 10 consecutive years. In 2013, China-Africa trade volume reached more than 210 billion dollars, which is more than 2,000 times the bilateral trade volume in 1960. In recent years, despite the decline in international commodity prices, the trade volume between China and Africa has fallen below 200 billion dollars, it is still nearly three times higher than the America-African trade volume. Africa is also China’s third-largest overseas investment market and the second-largest overseas engineering contracting market. By the end of 2017, Chinese investment stock in Africa has exceeded $100 billion, and more than 3,500 Chinese companies have invested in Africa.

 

China and South Africa have built up a good relationship through the “Belt and Road Initiative” construction of mining infrastructure. The “Belt and Road Initiative” is a project implemented by the Chinese government to open up foreign trade channels, and it is also developing projects in many countries. Although the “Belt and Road Initiative” focuses on Europe and Asia, which is similar to the ancient Silk Road, the modern road extends to Africa now.

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South Africa and China are not only partners of the BRICS countries, but also have 20 years of diplomatic cooperation history and frequent trade. In 2017, the bilateral trade volume reached US$39.17 billion. South Africa exports a variety of goods, while China pays more interest in the metal and mining industries. Minerals and precious metals account for about 85% of South African total exports to China. Therefore, China is specifically targeting South Africa’s platinum and chromium, which are used in catalytic converters and stainless steel production respectively. The project manager of HXJQ Machine has said that many Chinese mining companies will invest in mineral development in the South African market. China is the largest exporter of these two metals. Like past trade relations, South Africa hopes to continue to maintain such a relationship in the future of the mining industry.

A Chinese company has purchased the Palabora Mining Company, ensuring the 20-year ongoing operations of Palabora, thereby securing 5,000 jobs. Previous investments from the BRIC countries have created 36,852 jobs from 189 projects. Chinese companies will also provide skills training when investing in South African companies to enhance their future operations in South Africa.

In addition, Ramaphosa stressed that with South Africa’s untapped mineral resources and large amounts of capital entering the country, the prospects for South African mining are bright.

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