Re-enter the dragon

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Beijing’s search for strategic holdings in energy and natural resource companies is at full throttle again, outbidding competitors and driving up asset prices. This makes the ‘China price’ a popular one for Africans selling such assets – even if the raw materials are used to manufacture goods at a ‘China price’ against which no African factory can compete. So far this year, Chinese companies have bought more base metals than they did in 2008, when supplies of and demand for Chinese products slumped. Out-spending the Korea National Oil Company, China’s second-largest oil producer Sinopec bought Switerland’s Addax Petroleum on 24 June for $7.2 bn., winning control of important African operations. Chinalco, China’s leading aluminium producer, was frustrated by its failure to increase its stake in Australia’s Rio Tinto last month and is now targeting South Africa’s Anglo American. Backed by Beijing’s huge foreign reserves, Chinalco would have no trouble in raising the US$41 bn. to buy Anglo. That would give it control of South Africa’s richest mining assets and a significant stake in De Beers’ diamond conglomerate. The main obstacle is the Swiss-British mining house Xstrata, which has launched its own hostile takeover bid for Anglo. Beijing’s scramble for resources rattles the USA and EU, which on 23 June called for consultations with the World Trade Organisation on China’s restrictions on mineral exports.