PUTIN’S AFRIKA KORPS

Publication: Eurasia Daily Monitor Volume: 5 Issue: 129

Deals by Russian companies seeking to acquire African minerals seem to be the order of the day. A $2 billion investment in Zambia was announced in June. The companies, whose names were withheld, are seeking to acquire mining assets in the mineral rich African country. On June 19 Moscow Times wrote that Norilsk Nickel, Russia’s largest copper production company, could be one of the companies. Zambia is Africa’s largest producer of copper.

Russia’s main competitor for Zambian copper, as well as for other mineral resources in sub-Saharan Africa is China. In 1998 a Chinese company acquired the Chambishi copper mine in the north of the country.

Norilsk Nickel already has a large nickel mining operation in Botswana, which it acquired in 2007. RusAl, the world’s largest aluminum and alumina producer, owned by the Kremlin-friendly Russian oligarch Oleg Deripaska, has a majority stake in Alscon in Nigeria and owns the Frie aluminum company in Guinea and the Dyan-Dyan bauxite field, one of the world’s largest bauxite deposits.

Rosneft and Stroytransgaz have signed exploration deals in Algeria, Nigeria, Angola and Egypt worth more than $3 billion. In 2007 Lukoil bought 63 percent of an oil field off the Ivory Coast in a production-sharing agreement.

In May Severstal Resource bought the exploration rights for a 500-million-ton deposit of iron ore in Liberia.

Gazprom, the bogyman of Russian companies, is keen on buying energy resources in Algeria, Nigeria, Cameroon and other countries. Christophe Gerard, a business development executive in Gazprom’s Netherlands office, told Reuters that “Africa is definitely on Gazprom’s international expansion path…We have the money to do it” (Reuters, November 1, 2007).

Council of Federation Chairman Sergey Mironov told a gathering of African ambassadors in May that Russian investment in Africa was $1.5 billion. This is constantly increasing and probably did not include money from private Russian companies (http://mironov.info).

At the same time China has poured billions into the continent. Much of this money, however, has gone into developing infrastructure as well as constructing lavish parliament buildings and sports stadiums.

A UN publication, (Africa Renewal, vol. 20, no. 4, January 2007) stated that China would double aid to Africa by 2009 (to about $1 billion); set up a $5 billion China-Africa development fund to encourage Chinese companies to invest in Africa; and provide $3 billion in preferential loans and $2 billion in preferential buyer’s credits to African countries. Finally, it would cancel all debts from Chinese interest-free government loans that had matured by the end of 2005 for the 31 highly indebted and least developed countries (LDCs) in Africa that have relations with China (an amount estimated at around $1.4 billion)

In the battle for the hearts, minds and minerals of Africans, both the Russians and the Chinese enjoy certain advantages over the “imperialist” West. The Chinese point to their past colonial status and claim that they are coming to Africa as “friends” to help their African brothers. The Russians, on the other hand, who were on the opposite side of colonialism, count on rekindling their Cold War alliances with African countries, which the Kremlin used as pawns against the West.

During his 2006 tour of Africa, former Russian President Vladimir Putin, accompanied by some 100 Russian business leaders, spoke of his country’s interests in the nuclear energy market, complaining that “Russia’s interests are being trampled upon,” by whom he didn’t say, but presumably by the West (Inter-Press Service, September 11, 2006).

On June 27 RIA Novosti reported that Somali Ambassador to Russia Mohamed Handule expressed hope that Russia would take part in the development of uranium deposits, oil and natural gas production in his country. “Somalia believes that production of this uranium is a prerogative of Russian firms, stemming from former intergovernmental agreements with the U.S.S.R.,” Handule was quoted as saying. The proposal, enticing as it seems, might not come to fruition anytime soon, given that Somalia has not had an effective central government since 1991.

In 2006 Russia also struck a $250 million debt-for-development swap with the World Bank for projects in sub-Saharan Africa, and earlier that year Russia’s Vneshtorgbank opened a representation office in Angola.

In a tit-for-tat move designed to flex more financial muscle in Africa, the Industrial and Commercial Bank of China, the world’s largest bank by market capitalization, announced that it would buy a 20 percent stake in Standard Bank, South Africa’s largest bank. The deal was arranged by Goldman Sachs.

“Economically, Beijing has used forums like the Summit of the Forum on China-Africa Cooperation held in Beijing in November 2006 to show its desire to invest in African industries outside of natural resources and infrastructure projects that support the extraction industries” (Power and Interest News Report, November 7, 2007).

Putin’s Afrika Korps and its competition, the great “Chinese Take Out” in sub-Saharan Africa should be of major concern to Western governments, if mineral security matters. Unfortunately, Africa still finds itself far down on the list of Western priorities, even at a time when gold is hovering at close to $1,000 per ounce. This might, however, change, if copper, which currently sells at $4.00 a pound, jumped to $40.