The World Economic Forum is presently meeting once again at its place of preference – the picturesque Swiss ski-resort of Davos. One item on the agenda is the dark continent of Africa, and the potential for a new, twenty-first century wave of resource plunder. China is leading the charge, and this is not lost on the rest of the world.
Mineweb’s Alex Hogg, who is in Davos, reports that German Chancellor Angela Merkel specifically referred to the new battle for Africa’s mineral riches in her opening address to the forum, suggesting “what we need above all is a responsible approach”. Ironic really, given that it was the Germans, and the French, and the English, Dutch, and, good grief, even the Belgians who initially raped Africa a couple of centuries ago, even before the Americans.
Merkel will this year become president of both the European Union and the G8, so her threat to keep Africa high on the agenda carries some weight. The problem is that China is getting in there first. While Merkel wants to “strengthen the position of African states as equal partners when it comes to access and to control of Africa’s raw materials”, Rio Tinto’s Paul Skinner was more direct:
“We will have to offer things in Africa”, said Skinner. “If we want to succeed in the competition for resources, as an industry we will have to be a lot more thoughtful in how we approach these opportunities”.
Maybe this time the West might come up with a better gift than smallpox.
Meanwhile, the Chinese have had things sussed for years. Last November, 47 African heads were wined and dined in Beijing. China has an Official State Policy on Africa – the only other regional bloc to be so honoured. It has long been organising relationships and alliances with African nations – building infrastructure and implementing agricultural projects – while the West has rolled in, taken, and left.
Russia is also peeved. Oleg Deripaska, head of Russia’s Basic Element Company noted “China is bidding against us for mineral deposits in Africa”. This is not good news for Alcan head Dick Evans, who fears new entrants might push up prices.
But in the greater scheme of things, it is not higher prices that might be the end result, according to Morgan Stanley chief economist Stephen Roach. A perennial bear, Roach has long argued that the super-cycle theory (commodity prices will stay stronger for longer due to China) is flawed for the simple reason that China will not go on paying ridiculous prices for ever. China has accounted for 50% of world demand recently, but even the Chinese can see the folly in constantly pushing prices up.
Africa has not yet weighed heavily as a part of the supply equation. It will take a couple of years, but soon the impact will be felt. China has recognized Africa as a source of supply. Says Roach:
“We will be spending a lot more time analysing [China’s] role in Africa in the future”.