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Research Report

Analysis of approvals for Chinese companies to invest in Africa’s mining, agriculture and forestry sectors

Huang Wenbin
Andreas Wilkes
Copyright Date: Jan. 1, 2011
Pages: 38
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Table of Contents

  1. (pp. 1-1)

    The ‘Chinese trade and investment in Africa: Assessing and governing trade-offs to national economies, local livelihoods and forest ecosystems’ project, launched in March 2010, aims to advance understanding of the social, economic and environmental impacts of Chinese investment in commodities or sectors affecting forests and livelihoods in Africa (e.g. timber, mining, agriculture), and to strengthen the capacity of decision-makers in government, civil society and the private sector to enact reforms to maximise social and economic benefits while minimising adverse effects.

    This project seeks to understand China’s role in shifting global trade flows and investment patterns; to understand what is unique...

  2. (pp. 2-3)

    Examination of the MOFCOM database identified 1346 records of Chinese companies declaring their intention to invest in Africa, covering the period from 1988 to 2010. This accounts for 8.47% of the total number (15 895) of records in the MOFCOM database. Although the first record in the database dates back to 1983, the first investment record in Africa is in 1988, when Jiangxi International Economy and Technology Cooperation Corporation, a state-owned company, applied to set up a representative office in Zambia.

    To help understand trends in investment approvals, the period 1988–2010 can be divided into 2 phases. The first...

  3. (pp. 3-6)

    As mentioned above, many mining, forestry and agriculture companies’ approvals to invest in Africa are classified under other economic sectors, such as manufacturing, wholesale and retail, and geological prospecting. In this section, we separate mining, forestry and agriculture out of the general ‘agriculture’ category, and include records relating to these 3 sectors that are allocated to other sectors using the standard classification presented above. In the mining sector, records referring to metal and non-metal ores (e.g. quarries) are sometimes difficult to distinguish, and some non-metal mining investment approvals may be included in the mining sector.

    This re-categorisation results in 278...

  4. (pp. 6-8)

    This research project focuses on the Congo Basin and southern African woodlands because of the importance of their remaining forests. The countries of concern in these two eco-regions are Cameroon, DR Congo, Equatorial Guinea, Gabon, Mozambique, Republic of Congo, Tanzania, Zambia and Zimbabwe. Together, these countries cover 6.3 million km², more than one-fifth of the total African land area.

    The MOFCOM database includes 293 investment records in these countries, which, at less than 22%, is not a very large share of the total records for Africa. However, of these, 44% (128 records) relate to mining, forestry and agriculture. This indicates...

  5. (pp. 8-9)

    In addition to the green land investments recorded in the MOFCOM database, Chinese companies have been engaged in a large number of overseas M&A activities in recent years, many of which are in Africa. M&A approvals are not included in the MOFCOM database. For insights into trends in this area, we rely on two reports compiled by Deloitte (2010a, 2010b). Deloitte’s reports include only completed M&A activity, and do not account for the likely large number of M&A initiatives that are not followed through to completion.

    From 2003 to mid-2010, Chinese overseas M&A activity increased greatly in terms of both...

  6. (pp. 9-10)

    The analysis of records of Chinese government approvals for participation in overseas investment by Chinese companies shows 1346 investment records of intent to invest in Africa. This is equivalent to less than 8.5% of the total number of approvals for Chinese companies to invest overseas. Amongst the specific sectors of concern to this research project, mining investment in Africa is an important field for Chinese companies investing in Africa, accounting for 15% of the total number of investment records. DR Congo, Zambia, Nigeria, Algeria and South Africa are important mining investment destinations, accounting for nearly half of all investment approval...