This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

China Is Reaping Africa's Riches

Stocks in this article: E CNPZ SNP ABX CMI CAT RDS.A

In 2006, China's herculean state-run offshore oil driller CNOOC Ltd. (CEO) announced it would buy a $2.3 billion stake in a Nigerian deep-water oilfield, according to the Japan External Trade and Development Office's Institute of Developing Economies. A few months later, the institute said, China Petroleum & Chemical (SNP) secured claims worth $2.4 billion to look for oil in waters off Angola.

To supply minerals for China's quick development, Africa is there again. China relies on sub-Saharan Africa for cobalt imports and looks to the same continent for much of its manganese, the Institute of Developing Economies says.

In one landmark tie-up, African Minerals (AMI:L) made a deal with China Railway Materials Commercial three years ago for extraction of steel-related products.

China has stymied the West, despite its traditional and often longer-standing ties with African countries, with its approach: giving development aid to the places where it seeks resources.

Beijing has extended grants and zero-interest loans to Zambia, for example, since the 1960s, and what a payoff: China now has 99-year rights to the African country's Chambishi Copper Mine, the largest foreign nonferrous metal mine approved by Beijing for development and construction.

For sub-Saharan countries China has donated drought-relief supplies even during its own periods of natural disasters.

"China's 'new foray' into Africa is attracting much international attention and contentious debate," the Centre for Chinese Studies under the University of Stellenbosch in South Africa said in a 2008 report -- and the nation's position is only stronger five years on.

"China is seemingly engaging Africa on new terms -- terms that are not shaped by traditional powers, nor perhaps even by Africans themselves," the report says. "It represents a new approach to the continent...a collaborative state-business approach to foreign policy. China's foreign aid forms an integral component of this paradigm."

This is what puts China in the lead. Western countries where other companies are seeking resources in Africa don't feel the pinch that China does, as their GDPs aren't growing as fast while oil and minerals may be available closer to home. So they're not doing anything that's ambitiously special to help African countries develop.

But what if some day they suddenly need a new source of oil and minerals?

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs