The intrepidity of Beijing’s investment policy on the exploration, exploitation and transportation of Africa’s mineral resources is clear in this report on new Chinese-funded (and -built) mine-to-port rail projects in West Africa’s Ebola neighbourhood. The $9,5-billion planned new and improved rail infrastructure in Mali will open the way for the country to exploit and export its bulkier mineral products – including iron ore, bauxite and uranium – and thus reduce current dependence on its more easily transportable gold exports. The planned investment adds weight to Chinese Premier Li Keqiang’s recent forecast that his country’s direct foreign investment in Africa will quadruple to $100-billion between 2014 and 2020. – GK
By Tiemoko Diallo and Bate Felix
BAMAKO (Reuters) – Landlocked Mali aims to diversify its mining sector away from gold with Chinese-built rail projects worth $9.5 billion that would link it to the Atlantic coast, even as slowing Chinese growth and falling commodity prices cool investment.
The West African nation – the continent’s third-largest gold producer – said it had signed a string of investment deals with China totalling $11 billion, with most of this going to finance the rail deals. Chinese authorities, however, have not confirmed the investment.
Mali said $8 billion would finance a 900-km (560-mile) railway to Guinea’s port capital Conakry and $1.5 billion would renovate a rail link to Senegal’s capital Dakar, Mali’s main gateway port.
The improved transport links would attract investors to under-explored resources such as iron ore, bauxite and uranium that are bulkier and more costly to transport than gold.
“The infrastructure will enable Mali to end its dependency on gold,” said Lassana Guindo, an adviser at the mines ministry.
President Ibrahim Boubacar Keita is striving to kick start Mali’s economy after a brief French-led war in early 2013 against northern Islamist rebels dragged it into recession. In October it also became the sixth West African country to be touched by the deadly Ebola virus, which has killed nearly 5,000 people and hammered regional trade.
No deadline has been set for delivery of the rail projects but Mohamed Saïba Soumano, an adviser in Mali’s transport ministry, said talks were underway after the Chinese delegation’s visit to Bamako in October.
China Railway Engineering Corporation would build the Bamako-Conakry leg while China Railway Construction Corporation would be responsible for Bamako-Dakar, Soumano said. He said the parties would sign tripartite framework deals between Mali-China-Guinea and Mali-China-Senegal.
“After the framework agreements, the Chinese partner will have up to 12 months to present a detailed preliminary project,” Soumano said. “Thereafter, China will submit financing proposals with Chinese banks to the states.”
Mali’s drive to attract mining investors comes at a time of falling prices for many commodities and weak growth in China and other leading economies. Iron ore prices, for instance, have plummeted nearly 40 percent so far this year amid softening demand from China, the world’s largest consumer of most commodities.
With a global surplus of supply, several iron miners have scaled back on new capital-intensive projects, while leading producers Rio Tinto and BHP Billiton are focusing on increasing production at their low-cost Australian operations.
In Sierra Leone, London Mining Plc announced this month it would enter administration due to the slump in iron prices and the impact of the Ebola virus on its operations.
“In West Africa, with infrastructure to build — even if it is funded by the Chinese — it will be very demanding in these market conditions,” said Chris Hinde of SNL Metals & Mining. “Funding for exploration and for projects in countries perceived as less stable remains very difficult.”
Tom Wilson, director of the Africa Practice consultancy, said he would be surprised if the $11 billion announced by the government was fully deployed.
“China has a history of pledging, in non-binding MoUs, to make major, multi-billion dollar investments in infrastructure in West Africa and failing to deliver,” Wilson said. “Chinese parastatals are not spending as they have done in the past.”
Nevertheless, some plans are already going ahead.
Chinese diversified company CGCOC Group plans to exploit Mali’s 100 million tonnes Bale iron deposit, 220 km (136 miles) west of Bamako. “The company will build a steel plant and also construct a 400 megawatt power plant,” said Ousmane Mamadou Konaté, a technical adviser on a Malian delegation to China in September.
The firm has not commented, but its President Ji Weimin has signed a deal with mines minister Boubou Cisse to modernise Mali’s national mines laboratory.
Aside from Bale, other iron ore deposits in the same basin are estimated to hold some 400 million tonnes and would all benefit from the rail project, Guindo said.
Eurasian Natural Resources Company, which holds the rights to Mali’s estimated 439 million tonne bauxite deposit in Falea, also stands to benefit from the prospective railway.
ENRC country manager Dialla Konate said the company is targeting production of about 152 million tonnes of alumina – used to produce aluminium – from Falea and other Malian projects.
“In our ongoing feasibility study, we plan to use both rail lines to Conakry and to Dakar,” Konate said.