By Christopher Bodeen
The Associated Press
BEIJING (AP) — A $7 billion mining deal between Guinea’s repressive military regime and a little-known Chinese company underscores China’s full-throttle rush into Africa and its willingness to deal with brutal and corrupt governments.
The deal announced two weeks ago by the West African country’s military junta offers the company, China International Fund, access to Guinea’s bauxite and other minerals and could provide major revenues to a government facing international isolation. Guinea’s soldiers opened fire on demonstrators late last month, killing up to 157, and raping women in public.
Human rights groups decried the pact. China’s government has declined to confirm it or answer related questions, and the company also refused to comment.
In many ways, the deal reflects established Chinese business practices in Africa, characterized by huge investments in a still-poor continent, but also secrecy and often scant regard for labor and human rights.
China’s defenders point out that other investors from the West, Japan, India, and elsewhere are also major economic partners with less-than-democratic African governments. In Guinea, Alcoa of the United States and Anglo-Australian Rio Tinto PLC are already major players in the bauxite business. Also, China has given aid, loans, or investment to more than 17 African nations, some of which do have democratic governments.
But China’s practices have raised questions about whether the huge sums will hamper the progress of human rights and good governance in Africa, even as they raise the standards of living and line the pockets of some.
China has given large chunks of money to corrupt and abusive regimes such as those in oil-rich Nigeria and Sudan, much criticized over abuses in the Darfur region. For example, China has a controversial $9 billion agreement with violence-plagued Congo.
“There’s obviously mixed emotions with regard to China–Africa relations,” said Kellie Jane Whitlock, of the South African magazine Corporate Africa.
Unlike companies from the recession-struck West, there are “Chinese companies that are still growing and looking into investing further into Africa,” Whitlock said. The Chinese are “quite inclined to look after their investment and build their investment. They are serious about investing in Africa.”
Scrutiny and mixed emotions are rising in Africa as the volume of China’s dealings soar. Trade has soared 10 times since 2001, passing the $100-billion mark last year. Estimates of Chinese investment in Africa range upward from $6 billion as China tries to lock up oil, gas, and other key resources for its resource-hungry economy. Estimates for total loans, investment, and aid donations — often difficult to distinguish from each other — run closer to $50 billion.
China International Fund has done big deals with another undemocratic African government: Angola. The company, known as CIF, is building housing, highways, and the capital’s airport in Angola, which is one of China’s leading suppliers of oil.
CIF is a private company, though its ultimate ownership is unclear.
But in embarking on these deals, it can count on high-level access to leading Angolan officials and a web of contacts to China’s state-backed industries and companies, especially the Export-Import Bank of China, which funds many of the country’s major overseas investments. CIF’s directors are also believed to have ties to China’s military and security forces, boosting their relationships with the country’s communist leadership.
In the case of China International Fund and Guinea, it isn’t known whether the company was working on the deal before December’s coup that brought Capt. Moussa “Dadis” Camara to power.
In exchange, the company would theoretically gain access to Guinea’s plentiful deposits of bauxite, the raw material used to make aluminum, along with diamonds and gold. Mines Minister Mahmoud Thiam said the Chinese company “will be a strategic partner in all mining projects.”
Thiam also said that new power-generating plants, railway links, and planes for both international and local air transportation are part of the deal.
Founded in 2003, CIF appears to be among the boldest — and best connected — of the Chinese investors in Africa. The company’s Hong Kong business registration lists it as 99 percent owned by Dayuan International Development Limited, identified by Chatham House analysts as the parent company of China Angola Oil Stock Holding Ltd., which exports Angolan oil to China.
CIF has become a broker for huge infrastructure projects in Angola, tapping financing from China’s Exim Bank and secured by the African nation’s oil revenues.
Many of those remain in the planning stages, however, and some have run aground. Chinese media reports say other Chinese subcontractors have complained that CIF was failing to pay for some other African construction projects. ♦