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Chinese investment

São Tomé and Príncipe drops Taiwan, embraces China

Written by J. Michael Cole.

The African nation of São Tomé and Príncipe on December 20 announced that it was severing diplomatic relations with the Republic of China (Taiwan) and establishing ties with the People’s Republic of China.

Following the news, Taipei announced that it was immediately severing diplomatic ties with the African country and withdrawing all diplomatic and technical personnel.

Taiwan now has 21 official diplomatic allies worldwide, and just two in Africa—Burkina Faso and Swaziland. Continue reading “São Tomé and Príncipe drops Taiwan, embraces China”

Xi Jinping’s vision for Chinese football

Written by Simon Chadwick.

It is now two years since President Xi Jinping announced his vision for the Chinese sports industry: to create a domestic economy worth $850 billion by 2025. The vision is epic in scale: the most generous estimates of the current global industry are around Xi’s target for China. Continue reading “Xi Jinping’s vision for Chinese football”

Europe as key destination for China overseas investment

Written by Alain Sepulchre.

For years, China has been known as a destination for foreign direct investment, as multinationals flocked there to build export platforms and take advantage of its fast-growing market. Now, however, it is China’s outbound foreign direct investment (OFDI) that is shaping the world. In the first quarter of 2015, China claimed its largest-ever share of global mergers and acquisitions (M&A), with Chinese companies’ takeovers of foreign firms amounting to US$101bn, or 15% of the $682bn in announced global deal activity. In just three months, China recorded more outbound investment transactions than in the whole of 2015, when US$109bn in deals were announced.

Continue reading “Europe as key destination for China overseas investment”

Europe, AIIB and reconfiguring the geography of capitalism

Written by Leonardo Ramos.

The creation of the Asian Infrastructure Investment Bank (AIIB) was a milestone in the contemporary world order. Presented as a new source of financing to the emerging Asian economies, particularly on infrastructure issues, it includes fifty seven countries as founding members. The AIIB and the New Silk Road (NSR) are central elements in China’s development strategy of “One Belt, One Road” (OBOR), which includes the establishment of a network of regional infrastructure projects, trade liberalisation and financial integration, with important consequences for the political economy of Asia and the rest of the world. In this context, the European Commission signed a memorandum of understanding with China in June 2015 in order to coordinate the European Commission’s Trans-European Networks strategy with the NSR. Continue reading “Europe, AIIB and reconfiguring the geography of capitalism”

From disdain to greater interests: China and the rest of the world.

Written by Daouda Cissé.

China is at the heart of the world economy. China’s economy has never been more strongly connected to the global economy than today. Increasingly, China’s economic success or downturn has impact on the global economy. China’s impact on the current crisis of the global commodity market and the recent turmoil in the Chinese stock market and the consequences for different economies are examples in this regard. Continue reading “From disdain to greater interests: China and the rest of the world.”

Greenland’s mines could finally attract Chinese investment

Written by Jichang Lulu.

Conditions might be ripe for Chinese investment to finally reach Greenland. Once a hot media topic, Chinese interest in Greenland mining was rather tepid when I surveyed it last March for this blog. Media attention has however remained largely orthogonal to the actual evolution of serious Chinese interest in Greenland: as two projects progress towards production, China Nonferrous, an integrated miner owned by the central government, might be about to become the major player in Greenlandic mining. One of these projects will mine a rare-earth deposit of global importance. The other, a zinc mine, would become the world’s northernmost settlement on dry land. If developed, they could open the door for more investment. As a major SOE, China Nonferrous is explicit about such pioneering role, one that goes beyond its primarily economic motivations.

The Far North

The mining project that looks closest to coming to fruition is the Citronen Fjord zinc and lead deposit. The owner of the license, Australia’s Ironbark, has already applied for an exploitation permit, and a public consultation process that involves meetings in several towns is underway. Vittus Qujaukitsoq, the Greenlandic minister (naalakkersuisoq) whose portfolio includes natural resources, has expressed optimism on the mine’s prospects and hopes it will bring much-needed jobs and tax income.

The mine is planned to employ a few hundred people. Although around 80% will be foreigners initially, documents submitted by Ironbark as part of the permit application claim that they will be “progressively replaced” with local workers. A planned influx of foreign, specifically Chinese, was precisely what made another mining project controversial enough to create a political crisis in 2013, but the smaller foreign workforce demanded at Citronen Fjord, likely to be flown in directly from abroad and hardly spotted in Greenlandic towns, should not generate that level of opposition.

China Nonferrous (中色), through its listed arm NFC (中色股份) entered a partnership with Ironbark through a non-binding agreement that envisages the Chinese company building the mine, facilitating Chinese financing for around two thirds of the cost, and possibly buying a stake in the project. Ambitious though that sounds, China Nonferrous’ commitment to the project will likely depend on zinc and lead prices. These have recently reached multiyear lows, and decreasing Chinese demand for basic metals doesn’t suggest a miraculous recovery is on the way.

If the project goes ahead, China Nonferrous and its partner Ironbark will share the title of world’s northernmost miner. The Citronen site is on Peary Land, at around 83°N and just 800 km from the North Pole. Staff at the mine thus would be staying the world’s northernmost settlement.

The Not-so-far North

Down at the opposite end of Greenland, at a tropical latitude by comparison, near the town of Narsaq, the Kvanefjeld uranium and rare-earth project is also moving towards the exploitation stage and has already started trial production. Kvanefjeld is owned by another Australian company, Greenland Minerals and Energy, also under a similar non-binding agreement with China Nonferrous’ listed arm NFC. The foundations of the partnership seem solid, given that the mine’s output should be a good match for the massive REE separation plant a China Nonferrous subsidiary is building in Xinfeng 新丰, Guangdong, expected to be ready by the end of next year.

China Nonferrous’ little-reported interest in the Arctic also extends to Iceland. Last July, NFC signed a MOU with local company Klappir Development on an aluminium smelter in Hafursstaðir, some 100 km west of Akureyri. The plans have enjoyed the support from the Chinese embassy for a few years now: already in 2013, then-ambassador Ma Jisheng 马继生 (eventually removed from his post, allegedly suspected of spying for Japan) had voiced support for the project; Ma’s successor, Zhang Weidong 张卫东, has discussed the project with local officials, and recently visited China Nonferrous headquarters in Beijing, extolling abundantly the plant and its significance as China’s first major investment of its kind in Iceland.

Pioneers

China Nonferrous’ northerly foray accounts for about all serious Chinese interest in Greenland’s ores for the time being. The other two Chinese-owned mining licenses on the island are all but dormant: Jiangxi Copper’s Wegener Halvø copper site, though historically  significant, is unlikely to see much action in the short term given current copper prices; General Nice (俊安集团) can be expected to keep sitting on its exploitation permit for the Isua iron mine. China Nonferrous is still the largest company with a serious interest in Greenland’s mines. The fact that the Citronen and Kvanefjeld projects are approaching production is a significant for the island, a place where, despite the importance attached to mining as key to economic development, exactly one mine is currently active, and has only been for a few days.

With the important proviso that all its agreements in the region are so far non-binding, and its degree of commitment will surely depend on fluctuating metal prices, China Nonferrous could help open the way for more Chinese investment to flow into Greenland (and Iceland). Such a a pioneering role would suit China Nonferrous, whose endeavours abroad, as chairman Zhang Keli 张克利 recently put it when discussing the Hafursstaðir project, “are not only economic activities, but also represent the country’s image” and shoulder a degree of “social, economic, political and foreign-relations responsibility.”

Jichang Lulu is an independent researcher with interests in China’s engagement with the North. Image credit: CC by Greenland Travel/Flickr.

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