China interests in SA go deep
THE artist’s impression of what Modderfontein, east of Johannesburg, will look like in 20 years after the Chinese have spent R84billion creating the “New York of Africa” was greeted with much scepticism when it was unveiled a few years ago.
But for Du Wenhui, the chief operating officer of Zendai South Africa, the Chinese-owned company leading the development, the ambitious proposal is all about “hope and imagination”.
A spokesman said this week the project was “moving forward” although the master plan was being reviewed.
To date, construction has been limited to internal roads.
Hope and imagination may be just what South Africa needs from investors as the collapse in commodity prices and regulatory uncertainty have created a chilling reality for most.
Beyond the surreal plans for Modderfontein, to date much of the Chinese investment in South Africa has been in the mining sector.
Chinese mining investments include the following:
About 20% of Sibanye Gold is owned by Gold One, which in turn is owned by a Chinese consortium whose members include the China-Africa Development Fund and Long March Capital. The stake is valued at about R4billion;
More than 50% of Palabora Copper, valued at about R3-billion, is owned by a Chinese consortium that includes Hebei Iron & Steel and the development fund;
Through its 9% stake in Rio Tinto, Chinalco has an indirect stake in Richards Bay Minerals worth about R2.7-billion;
Jinchuan Group and the development fund have a 45% stake worth about R1-billion in Wesizwe Platinum;
Dilokong Chrome Mine is 60% owned by Sinosteel;
Jidong Group and the development fund own just over half of Mamba Cement in Limpopo;
SSC Mandarin owns 74% of Pamodzi Gold’s Orkney mine, worth about R675-million; and
Gold One owns 72% of Goliath Gold, worth about R80-million.
Chinese funds are also invested in Avontuur Manganese, Eastern Platinum, Ivanplats, the Thabazimbi Iron Ore Project and Nikwe Platinum.
Mining and the ambitious plans for Modderfontein may dominate the headlines, but China’s investments reach well beyond these sectors.
A recent report from the Centre for Chinese Studies at Stellenbosch University shows just how extensive the investments are:
In 2007, the Industrial and Commercial Bank of China bought a 20% stake in Standard Bank for $5.5-billion;
In 2013, the China-Africa Development Fund bought a stake in Independent News and Media SA — owner of The Star and Cape Times — for R250million;
In 2013, StarTimes rescued On Digital Media, the owner of TopTV. StarTimes renamed the pay-TV operator StarSat. According to the business rescue plan, StarTimes owns 20% of On Digital but gets 65% of profits. StarTimes plans to invest R1billion over five years; and
Equipment suppliers Huawei and ZTE accounted for more than half the South African telecoms market in 2013. The investments included ZTE’s $378million in Cell C in 2010 and Huawei’s $211-million in Telkom in 2008.
Increasing labour costs in China have led to some factories being moved to South Africa, which is attractive to Chinese investors because it can be used as a halfway production base for enterprises wanting to enter African and European markets through preferential trade agreements, says the Centre for Chinese Studies.
In 2013, home appliance manufacturer Hisense expanded its facilities in Atlantis, near Cape Town, with the help of a reimbursable cash grant from the Department of Trade and Industry.
Other deals include the recent purchase by Chinese multinational HNA Group of a 6.1% stake in Comair.
State-owned logistics and freight firm Transnet will pocket a R30-billion loan from the China Development Bank to improve its ageing train fleet, acting CEO Siyabonga Gama said on Thursday at the World Economic Forum on Africa in Cape Town. —