By Dong Zhixiong
It was in the 1990s, when the reform and opening policy had begun to direct Chinese capital abroad that the China Iron and Steel Industry and Trade Group Corporation (CSGC) first came to Africa. China is the world's biggest steel producing country, but its output of stainless steel at that time was low due to scant chrome resources. In addition to diamonds, gold and manganese, South Africa is rich in chrome -- the raw material for stainless steel products. Until the CSGC arrived, however, it lacked the know-how as to its to exploitation.
Working on the principle of mutual benefit, China and South Africa commenced a series of negotiations on chrome mine exploration. In 1995 both parties signed a contract establishing ASA Metals (Pty) Ltd., the largest joint venture yet between China and South Africa. The company was set up in Limpopo (formerly Northern) Province, where 70 percent of South Africa's chrome reserves are located. The South African party's contribution to the joint venture was a chrome mine with a 400,000-ton annual output. It had first opened in 1972, but by the time the CSCG arrived with the necessary capital to build a chrome steel metallurgy plant, it was facing bankruptcy. Since its establishment the joint venture has turned the mine's losses into a profit of US$ 7 million after paying off US$ 5 million overseas financing.
The project has been of mutual beneficial to both entities. South Africa practices sound financial and legal systems that were introduced from the European Continent, and is better outfitted than China with mining technology and metallurgical equipment. However, policy of apartheid and consequent lengthy estrangement from the international community meant that it was unfamiliar with international financing and had little experience in foreign trade. Having excelled in product distribution and market development as well as in international trade, the Chinese party was able to sell abroad the chrome steel the joint venture produced at a realistic price.
Both sides seek further development in this complementary cooperation, and on the second electrical furnace going into production in 2004, the production capacity will reach 120,000 tons of chrome steel annually which will further increase to 400,000 tons in 2010. The economic cooperation between China and South Africa thus has a bright future. The company now has its sights set on mining and processing South Africa's abundant manganese resources.
I have lived in Africa for such a long time that I feel a deep affinity for the continent and its people. One of my good friends in South Africa is Moeletsi Mbeki, well known journalist, businessman and brother of the President. He has profound understanding of Africa and high expectations for its future, having stated: "The twenty-first century is the century of Africa. Without the development of Africa, there can be no all-round development of humankind."
I have been on business trips to Angola with him on two occasions, and through him have gained a deeper understanding of Africa. When he came to China, I accompanied him to the Great Wall. He has a deep appreciation of China's ancient civilization, but is more focused on its economic development.
He said: "China tries hard to build a suitable environment for foreign investment and to perfect its legal system. That's why its economy has developed at such a rapid speed as to make China the world's biggest recipient of foreign investment. Its domestic cities go all out to make a better investment environment and so attract foreign capital. The Chinese want foreign investors to make money in order to maintain the flow of foreign capital, as it is only when they make a profit that the local people can do likewise. We must also keep this in mind."
(Dong Zhixiong is vice president of the China Iron and Steel Industry and Trade Group Corporation and has worked in Africa since 1991. )
(China.org.cn December 10, 2003)