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While China has been largely self-sufficient due to its exponential growth over the past few decades， it now demands more resources， namely food， to supply its needs. China has 20 percent of the world’s population， yet only 10 percent of the world’s arable land. Thus， to meet the demands of the population， the Chinese Government has encouraged domestic companies and investors to invest in natural resources abroad， including potash， a key ingredient used in the production of fertilizer.
Potash - located deep underground and formed from the compression of pre-historic oceans into minerals - is one of the world’s most sought-after commodities. For the past decade， China， along with India， has been forced to pay high prices to Uralkali’s Belarus Potash Co. （BPC） and Canpotex， a North American producer group， which collectively control over 70 percent of the global supply. This has been disadvantageous to China， which accounts for 29 percent of global demand.
Although 150 countries import potash， only a dozen actually produce it， with two thirds of production coming from European and North American cartels. Hoping to break this regimen， China， the world’s largest importer of potash， has made a concerted effort to invest in Central African potash resources to secure enough of the commodity to maintain its 50 percent import requirement and feed its giant population.
This comes as advances in exploration technology and increases in FDI have allowed for the discovery of unknown potash deposits in Africa. The largest untapped reserves of potash lie in Ethiopia， which， unlike most other global sources， has deposits closer to the Earth’s surface， which is cheaper to extract. According to UN Comtrade statistics， Ethiopian potash exports to China nearly doubled from $1.62 million in 2010 to $3.13 million in 2011. This trend is clearly only the beginning.
An earlier investment in Africa came from ChinaCo， a large staterun exploration company. In 2009， it entered into a joint venture with Allana Corp.， a Canada-based firm， to build a potash mine in the Danakil Evaporate Basin， which extends into northeast Ethiopia. ChinaCo also agreed to purchase a 19.99-percent stake in the company， as well as subsidize 70 percent of the mine development project as part of the deal. A recent report indicates that 1.3 billion tons of the resource can be extracted， with production slated to start in 2014.
A more recent player to secure this commodity is the ChinaAfrica Development Fund， a wholly-owned subsidiary of the China Development Bank， which is set to invest around $100 million this year in a potash project run by the Hong Kong-listed Dingyi Group in the Republic of the Congo. Traditionally， the potash trade has been disadvantageous for China， which wielded little or no pricing power in the market due to the dominant cartels. However， since recent internal conflicts broke up Uralkali’s BPC， prices are predicted to fall by as much as 25 percent by early next year.
With the cartel’s stronghold on supply restrictions and prices diminishing， China now has the upper hand due to the vast volumes it imports and its strategic positioning to expand its supply. This will not only aid China in sustaining a future for its arable production and population needs， but also push additional FDI into Africa， helping to further develop the continent’s own infrastructure and subsequent economic growth.
Morocco_ July： Chinese firm Sepco III signed a deal to build a 318 mw coal-fired plant in eastern Morocco as part of a plan to cope with the rapid growth in electricity demand. The total cost of the project is estimated to be $360 million and it will be funded primarily by the Chinese Exim Bank. The plant is set to start operating by the end of 2016.
Liberia_ July： China Union commissioned the first phase of its iron ore mining operations in Bong Mines， Liberia. The first phase includes setting up camps， hydraulic and conveyer belt machines， and completion of repairs on the railroad between Bong Mines and Monrovia. Owned by the Wuhan Iron and Steel （Group） Corp. （WISCO） of Hong Kong， the world’s largest iron ore mining company， Bong Mines marks the company’s first foray into Africa.
South africa_ august： Africa’s Nedbank， one of South Africa’s largest banks， entered into a formal alliance with the Bank of China. The two banks said they will cooperate in areas such as retail banking， credit cards and infrastructure finance. The lenders also hope to cooperate in currency， allowing Nedbank to do more business in the Chinese yuan while Bank of China will gain better access to the South African currency， the rand. The Bank of China could also eventually buy a strategic stake in Nedbank.
Uganda_ July： Uganda awarded the Isimba hydropower dam project to China International Water and Electric Corp.（CWE）， the second such project to go to China in less than two months. The 188-mw hydro-electric project is backed by a $500 million loan from China Exim Bank. Uganda is keen to expand its power generation capacity to meet its fastgrowing energy needs.
South africa_ august： Yangzhou-based Perfect China acquired the Val de Vie estate in the Western Cape， marking the first Chinese investment in South Africa’s wine industry. Perfect China， through its 51 percent shareholding in Perfect Wines of South Africa， purchased the 25-hectare wine farm， which includes 21 hectares of vineyards， a manor house and wine cellar. The deal is expected to boost exports of South African wine to the Far East.
Potash - located deep underground and formed from the compression of pre-historic oceans into minerals - is one of the world’s most sought-after commodities. For the past decade， China， along with India， has been forced to pay high prices to Uralkali’s Belarus Potash Co. （BPC） and Canpotex， a North American producer group， which collectively control over 70 percent of the global supply. This has been disadvantageous to China， which accounts for 29 percent of global demand.
Although 150 countries import potash， only a dozen actually produce it， with two thirds of production coming from European and North American cartels. Hoping to break this regimen， China， the world’s largest importer of potash， has made a concerted effort to invest in Central African potash resources to secure enough of the commodity to maintain its 50 percent import requirement and feed its giant population.
This comes as advances in exploration technology and increases in FDI have allowed for the discovery of unknown potash deposits in Africa. The largest untapped reserves of potash lie in Ethiopia， which， unlike most other global sources， has deposits closer to the Earth’s surface， which is cheaper to extract. According to UN Comtrade statistics， Ethiopian potash exports to China nearly doubled from $1.62 million in 2010 to $3.13 million in 2011. This trend is clearly only the beginning.
An earlier investment in Africa came from ChinaCo， a large staterun exploration company. In 2009， it entered into a joint venture with Allana Corp.， a Canada-based firm， to build a potash mine in the Danakil Evaporate Basin， which extends into northeast Ethiopia. ChinaCo also agreed to purchase a 19.99-percent stake in the company， as well as subsidize 70 percent of the mine development project as part of the deal. A recent report indicates that 1.3 billion tons of the resource can be extracted， with production slated to start in 2014.
A more recent player to secure this commodity is the ChinaAfrica Development Fund， a wholly-owned subsidiary of the China Development Bank， which is set to invest around $100 million this year in a potash project run by the Hong Kong-listed Dingyi Group in the Republic of the Congo. Traditionally， the potash trade has been disadvantageous for China， which wielded little or no pricing power in the market due to the dominant cartels. However， since recent internal conflicts broke up Uralkali’s BPC， prices are predicted to fall by as much as 25 percent by early next year.
With the cartel’s stronghold on supply restrictions and prices diminishing， China now has the upper hand due to the vast volumes it imports and its strategic positioning to expand its supply. This will not only aid China in sustaining a future for its arable production and population needs， but also push additional FDI into Africa， helping to further develop the continent’s own infrastructure and subsequent economic growth.
Morocco_ July： Chinese firm Sepco III signed a deal to build a 318 mw coal-fired plant in eastern Morocco as part of a plan to cope with the rapid growth in electricity demand. The total cost of the project is estimated to be $360 million and it will be funded primarily by the Chinese Exim Bank. The plant is set to start operating by the end of 2016.
Liberia_ July： China Union commissioned the first phase of its iron ore mining operations in Bong Mines， Liberia. The first phase includes setting up camps， hydraulic and conveyer belt machines， and completion of repairs on the railroad between Bong Mines and Monrovia. Owned by the Wuhan Iron and Steel （Group） Corp. （WISCO） of Hong Kong， the world’s largest iron ore mining company， Bong Mines marks the company’s first foray into Africa.
South africa_ august： Africa’s Nedbank， one of South Africa’s largest banks， entered into a formal alliance with the Bank of China. The two banks said they will cooperate in areas such as retail banking， credit cards and infrastructure finance. The lenders also hope to cooperate in currency， allowing Nedbank to do more business in the Chinese yuan while Bank of China will gain better access to the South African currency， the rand. The Bank of China could also eventually buy a strategic stake in Nedbank.
Uganda_ July： Uganda awarded the Isimba hydropower dam project to China International Water and Electric Corp.（CWE）， the second such project to go to China in less than two months. The 188-mw hydro-electric project is backed by a $500 million loan from China Exim Bank. Uganda is keen to expand its power generation capacity to meet its fastgrowing energy needs.
South africa_ august： Yangzhou-based Perfect China acquired the Val de Vie estate in the Western Cape， marking the first Chinese investment in South Africa’s wine industry. Perfect China， through its 51 percent shareholding in Perfect Wines of South Africa， purchased the 25-hectare wine farm， which includes 21 hectares of vineyards， a manor house and wine cellar. The deal is expected to boost exports of South African wine to the Far East.