Four-fifths of the world’s known platinum lies under South Africa. The country’s platinum mines were at the center of last year’s strikes by mine workers, and its broader mining industry is going through some turmoil. Anglo American Platinum, more usually known as Amplats, the world’s top platinum producer, is planning to mothball two unprofitable shafts and sell off another mine.
Yet China Development Bank is backing one of the few new platinum mines there, extending a cheap $650 million loan late last month to Wesizwe Platinum’s Bakubung mine which is due to start production in 2018. In what is thought to have been the first Chinese investment in the sector, the mining group Jinchuan has taken a 45% stake in Wesizwe.
Jinchuan is best known as a nickel, copper and cobalt producer though it is also China’s leading platinum producer. However, it has taken a different tack with Wesizwe than it did with its acquisition of South African copper and cobalt miner Metorex. That it bought outright and delisted. With Wesizwe, it has gone the route of being a minority partner. Platinum mining is such a specialized business. There is not much expertise outside South Africa. Jinchuan has a slogan, “We gather the Valuables, The Country and People will Prosper.” The valuables here are platinum mining engineers as much as the metal itself.
All that the Brics nations — Brazil, Russia, India, China and South Africa — really have in common is that they aren’t quite yet developed economies while calling them developing nations no longer does them justice. They have repeatedly found it difficult to make common cause. Witness their inability to come up with an agreed candidate for the presidency of the World Bank, or the managing directorship of the International Monetary Fund last year, come to that. On big issues like climate change, where the quintet could assert global leadership, they have been even more divided.
All the old divisions were on view at their summit in New Delhi this week, as was one of the main underlying causes of them. While the five nations agreed to study the feasibility of creating a Brics multilateral agency to fund infrastructure and core sector projects — a sort of mash-up of the World Bank, the regional development banks and the IMF, but their own — and to make it a tad easier to settle bilateral trade between Brics nations in local currencies, both decisions fell short of the progress in institution building that had been hoped for ahead of the meeting.
The reason is that Brazil, Russia, India and South Africa are all rivals of China in various ways. Each has their economic and geopolitical interests that don’t necessarily align with those of the others. All are competing for investment and trade, not just with each other but with developed and developing countries. All are seeking a sphere of influence and a place at the global high table. China’s is the common shadow they see falling over their efforts. Hence the wary progress in Delhi, beyond the easy sweeping joint statements of concern at global imbalances and criticisms of loose monetary policy in developed economics. Brazil, Russia, India and South Africa fear the clout that China would have in a Brics Bank and a growing trading block, however informal, in which the yuan would be trending towards being its single currency to the exclusion of the dollar. So none is rushing to bring any of that any closer. As long as those sorts of fears persist, the Brics, as a group, will have little influence on world affairs, regardless of the members’ individual economic clout.
China is now the world’s biggest gold miner. South Africa had boasted that title since 1905. But no longer. China mined 4 tonnes more in 2007 (276 tonnes vs 272 tonnes), says London precious metals consultancy GFMS, enough to vault it into top spot.
It is already the world’s leading producer of aluminum, zinc and lead; the second largest of tin; and among the top 10 in copper, nickel and silver.
China and South Africa mined 22% of the world’s yellow metal last year between the pair of them. Though China’s gold production has grown 70% in the past decade, South Africa’s has halved, Stricter safety regulations and rising production costs have made it a tougher business, even though price of gold has hit record levels. The same is true for other leading producers, such as Australia, Canada and the U.S., one reason that world gold production fell 1% last year.
China, meanwhile, has a large number of small-scale mining operations that are not over-troubled by safety regulations. Silicosis in miners from uncontrolled silica dust and arsenic and cyanide waste run offs from the mines are chronic problems.
GFMS notes that demand for gold, particularly for jewelry, grew strongly in China last year. And on the investment side, the Shanghai Futures Exchange has just launched the country’s first gold futures contracts, which should give Chinese companies even more influence over world gold prices.
They used to say of the British empire that trade follows the flag — and that the bankers were never far behind both. So, too, it seems with China.
Industrial and Commercial Bank of China is to take a 20% stake in South Africa’s Standard Bank, Africa’s largest, according to various reports. It is paying $5.5 billion. Standard Bank told shareholders earlier this week that it was in talks with an unnamed potential investor.
The stake represents a substantial step up in China’s involvement in Africa, which has largely been in natural resources hitherto via its program of aid and cheap loans in return for access to energy and minerals.
Standard is one of South Africa’s blue-chip banks and operates in 18 African countries, and there is plenty of opportunity for an African bank to finance the growing trade and investment between China and the continent. However, one sign of the concern the deal is raising in some quarters is that word is that South Africa’s central bank has put a cap of 25% on ICBC’s ownership of the bank.