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China, Africa ink $17 bil preliminary cooperation pacts

Comments (0) Africa, Business, Latest Updates from Reuters

BEIJING (Reuters) – Chinese companies and banks agreed preliminary deals with African counterparts on $17 billion worth of cooperation in sectors including infrastructure, energy, pharmaceuticals and information technology, the official Xinhua News Agency reported on Thursday.

Companies and financial institutions signed letter of intent for 39 cooperations pacts at a China-Africa economic and trade event in Beijing attended by more than 400 delegates.

Xinhua did not give further details.

Last year, Chinese President Xi Jinping announced a $60 billion development initiative at a summit in South Africa, saying it would boost agriculture, build roads, ports and railways and cancel some debts.

Such an initiative would proceed despite China’s slowing economy, Chinese officials have said.






(Reporting by Chen Aizhu; Editing by Catherine Evans)

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Chinese demand for peanuts boosts Senegal’s economy

Comments (0) Africa, Business, Featured


The West African nation, the seventh largest exporter in the world, reached a record yield of one million metric tons in 2015.

Fueled by Chinese demand for peanuts, the price of the groundnut is on the rise in much of the world to the benefit of major exporters such as Senegal.

China, a major peanut producer itself, imports Senegalese peanuts to make oil, which is becoming increasing popular among Chinese consumers.

The West African nation, the world’s seventh largest exporter of peanut, has steadily increased its crop. Peanut production reached a record one million metric tons in 2015 and even greater yields are expected this year if rains are good.

Growth in peanut yields, along with targeted growth in rice production, could make the country self-sufficient by 2017, Senegalese President Macky Sall said. Rice production has doubled to 900,000 tons in the past four years and is on track to again double in the next two years, Sall said.

The country’s farmers have adopted genetically modified seed to improve yields, and improvements in transportation and energy supplies have helped drive growth.

Senegal plans bond issue

Doubling down on crop exports, Senegal plans to issue a bond of $500 million to $1 billion this year to fund infrastructure development to spur more growth in the agricultural sector, Sall said.

Senegal’s economic ambitions are benefitting from a surge in peanut prices, driven by an increase in Chinese demand and weather disruptions in key growing regions.

According to the Financial Times, health-conscious Chinese consumers are snacking more on peanuts and using peanut oil for cooking.

Women sorting peanuts in central Senegalese village

Women sorting peanuts in central Senegalese village

As a result, China is going from being a leading exporter of peanuts to a major importer. Chinese exports have declined by about half to about 500,000 tons during the past 10 years while imports have increased by 50%.

According to the National Peanut Board, China remains the largest producer of peanuts in the world, with yields of more than 16 million tons per year, followed by India and the United States. Global production totals about 29 million metric tons a year with about 1.25 million tons making up exports. India, the United States, and Argentina are the largest exporters of peanuts.

Prices raise 20-30 percent

Chinese demand has pushed the price of peanuts up by 20-30% this year. “They are just hoovering everything up,” one London trader said.

While the weather looks promising for peanut yields in Senegal, other major producers have see disruptions because of bad weather. India has suffered poor harvest for two years because of weak monsoons.

Argentina, a leading supplier of Europe, is expected to suffer crop losses of 20-40% because of rain damage. Poor weather also may limit this year’s crop in South Africa.

Ironically, the United States, which produces about 10% of global supplies, is experiencing a peanut glut and lower prices. As a result, farmers are turning their crops over to the federal government as a form of repayment of annual loans. The U.S. government, in turn, plans to send 500 metric tons of peanuts to Haiti as humanitarian aid.

China helps increase yields

In 2014, China and Senegal completed a cooperative agreement designed to boost the African nation’s production of peanuts as well as its exports to China. Under the deal, China helped establish an agricultural technology demonstration center in Senegal in order to increase the capacity of farmers to adopt more efficient and competitive methods such as those employed by Chinese farmers.

In addition to assistance from China, the Islamic Development Bank has committed $220 million to finance water and other infrastructure projects related to groundnut production in Senegal. The World Bank has approved $20 million in financing to help boost crop yields.

Senegal’s bond issue later this year will also spur growth.

“The money will be used totally for infrastructure, roads and power. A little bit may be for health facilities and education,” Sall, the nation’s president, said. The government is targeting a yield of 6% or less for the new bond.

Economic success story

Sall, a geological engineer who won the presidency in 2012, has overseen steady expansion of the Senegalese economy as the country has improved transport connections and power supplies. Since 2012, economic growth has averaged 4.7% in Senegal – one of the highest rates in sub-Saharan Africa – and the economy is expected to grow by 6.6% this year.

Senegal is also counting on energy to boost its economy. Gas production from two offshore fields is scheduled to start in 2020. A year or two later, Senegal expects to start producing oil from a deep-water well.

Senegalese production also has plenty of room to grow. Yields are approximately 950 kilos per hectare in Senegal, less than a third of the 3,500 kilos per hectare that the Chinese produce and slightly more than half of the average global yield of 1,674 kilos.

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Gold eases off near 2-yr high, silver crosses $21/oz

Comments (0) Asia, Business, Latest Updates from Reuters

BENGALURU (Reuters) – Gold eased off a near two-year high, while silver breached the $21 level for the first time since July 2014 in highly volatile trade on Monday, prompted by a burst of short-covering in China.

Spot gold rose about 1 percent at one point to touch a session best of $1,357.60 per ounce. This was close to the $1,358.20 level reached on June 24, the highest since March 2014, when global markets went into a tailspin in the wake of Britain’s vote to exit the European Union. Spot gold was up 0.3 percent at $1,346.60 an ounce as of 0418 GMT. U.S. gold was up 0.7 percent at $1,348.50. Silver soared 7 percent at one point to $21.107, the highest since July 2014, before retreating below $20.25 by 0415 GMT.

“There is a little bit of a two-way battle going on in silver with a number of players going short in China,” said an analyst with an international investment bank.

The Shanghai Exchange Futures went limit-up as onshore players have aggressively been covering their short positions in the last few days, especially on Monday, said the analyst.

“Once the onshore market went limit-up, the short-covering buying spilled over to the London market.”

Chinese commodities from nickel to cotton surged on Monday on hopes Beijing would unleash more stimulus to prop up a sluggish economy, brightening the outlook for raw material demand. MKS trader Sam Laughlin said in a note global uncertainty would likely continue to fuel the recent rally in precious metals, but warned that there could be sharp periods of volatility. “The metal (silver) continues to be buoyed by its unique position as both an industrial metal in risk-on conditions and a safe-haven asset in times of uncertainty,” Laughlin added. Spot gold is expected to break a resistance at $1,351 per ounce and rise more to the next resistance at $1,367, said Reuters technical analyst Wang Tao. Hedge funds and money managers raised their bullish positions in COMEX gold and silver contracts to record highs in the week to June 28. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.41 percent to 953.91 tonnes on Friday, the highest since July 2013. [GOL/ETF] The U.S. markets are closed on Monday for the Independence Day holiday.


(By Vijaykumar Vedala. Reporting by Vijaykumar Vedala in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu)

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Nigeria signs $80 bln of oil, gas infrastructure deals with China

Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria has signed oil and gas infrastructure agreements worth $80 billion with Chinese companies, the West African country’s state oil company said on Thursday.

Nigeria, an OPEC member which was until recently Africa’s biggest oil producer, relies on crude sales for around 70 percent of national income, but its oil and gas infrastructure is in need of updating.

The country’s four refineries have never reached full production because of poor maintenance, causing it to rely on expensive imported fuel for 80 percent of energy needs.

These problems have been exacerbated by a series of attacks on oil and gas facilities by militants in the southern Niger Delta energy hub which pushed production down to 30-year lows in the last few weeks.

Oil minister Emmanuel Ibe Kachikwu, who also heads the Nigerian National Petroleum Corporation (NNPC), has been in China since Sunday for a roadshow aimed at raising investment.

“Memorandum of understandings (MoUs) worth over $80 billion to be spent on investments in oil and gas infrastructure, pipelines, refineries, power, facility refurbishments and upstream have been signed with Chinese companies,” said NNPC in a statement.

NNPC added the China roadshow was “the first of many investor roadshows intended for the raising of funds” to support the country’s oil and gas infrastructure development plans.

Earlier this week, NNPC said oil production had in the last few days risen by around 300,000 barrels per day (bpd) to 1.9 million bpd, due to repairs and no attacks having been carried out since June 16.

Goldman Sachs, in a report published on Wednesday, said a “normalization” in Nigerian oil production would put pressure on global oil prices and may mean prices will average less than $50 a barrel during the second half of 2016.


(Reporting by Alexis Akwagyiram; Editing by Mark Potter)

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Morocco enters free trade pact with China

Comments (0) Business, Featured, Middle East

morocco china trade

The north African nation seeks to diversify its trading partners through agreements with the Asian giant as well as India and Brazil.

Morocco has signed a free-trade agreement with China, the North African nation’s largest trading partner in Asia.

While the overall effect on the Moroccan economy is under debate, experts say the agreement will create more purchasing power for Moroccans, who will have access to Chinese goods that are typically less expensive than those produced in country or elsewhere.

The move underscores China’s growing role in the economy of the continent as well as Morocco’s determination to diversify its trading partners. Morocco has also entered trade agreements with Russia and India and an agreement with Brazil is under negotiation.

China is Morocco’s fourth largest trading partner after Spain, France, and the United States. Morocco is China’s seventh largest trading partner in Africa. While trade between Morocco and China has grown in recent years, it is still dwarfed by Chinese trade with neighboring Algeria. Trade between China and Algeria reached $8.6 billion in 2013 compared to $2.3 billion in trade with Morocco.

Experts debate impact

Analysts say the new agreements could have mixed results.

Moroccan textile factory

Moroccan textile factory

On the plus side, competition from Chinese goods could force Moroccan industries to better serve consumers in their country and Moroccan businesses will gain greater access to one of the largest markets in the world.

At the same time, they say, more than half of Moroccan exports are minerals, fertilizers and metals produced by large industries while small businesses struggle to compete.

Some argue that the opening of trade will cost jobs in Morocco, but others note that Moroccan and Chinese workers seldom compete for the same jobs. China’s economy is based on heavy and light industry, while agriculture, food processing and precision manufacturing dominate Morocco’s. The two countries do have some direct competition in textiles and leather.

The agreement will create more wealth in Morocco. With access to cheaper goods, even poor Moroccans will gain spending power.

Economic progress

With a gross domestic product of $252 billion and a population of about 33 million people, Morocco has made significant progress in integrating its economy into the global market through efforts including streamlined procedures for operating a business and launching a nascent aeronautics industry, according to the Heritage Foundation.

After a strong performance in 2015, with growth in the gross domestic product of 4.4%, the Moroccan economy has slowed this year, according to the World Bank. Drought has reduced cereal production, and GDP growth is expected to be less than 2% in 2016.

While Morocco has been a U.S. trading partner, as well as a key ally in the war on Islamist terrorism, the nation in recent years has sought to expand its trading partnerships, notably with members of the BRICS coalition of emerging economies that seeks to break Western domination of the global economy.

BRICS is made up of the emerging markets of Brazil, Russia, India, China and South Africa.

Agreements with India, Russia

In October, Morocco and India signed agreements designed to encourage more trade between the two nations. Morocco’s major exports to India are rock phosphates and phosphoric acid.

In November, Morocco announced a free trade agreement with Russia. Morocco is Russia’s main trade partner on the continent and its exports include citrus fruit, vegetables and frozen sardines.

In June, Moroccan representatives met with trade officials of Brazil to discuss a possible free trade agreement. Brazil is another importer of Moroccan phosphates and its derivatives.

Chinese influence grows

Meanwhile, China is a major trading partner with other African nations including South Africa ($20 billion), Nigeria ($15 billion) and Angola ($36 billion).

China in recent years has been developing relationships with many African countries through investment, aid and trade relationships, driven largely by China’s energy needs.

Morocco, a net oil importer with strong ties to the United States and Europe, has not been of great interest to China until recently. However, Morocco has sought allies in its territorial dispute with the separatist Polisario Front in the Western Sahara.

Given China’s strong trade ties to Algeria, it seems unlikely, however that the Asian nation would support Morocco in that dispute.

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Sinosteel cedes half its chrome claims in Zimbabwe to state

Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – China’s Sinosteel Corp Ltd’s business in Zimbabwe has ceded half its mining claims to the government, complying with Harare’s demands to chrome producers to give up some of their claims, a company official said on Tuesday.

The Southern African nation holds the world’s second largest deposits of chrome, which is smelted to produce ferrochrome, a raw material used in the making of stainless steel.

Zimbabwe’s mines minister last year asked Sinosteel’s Zimasco and Zimbabwe Alloys, which owned 80 percent of all chrome mining claims, to release some ground for distribution to new investors. The companies were owned by Anglo American until 2006.

The government has previously said it wants to redistribute some claims to several local investors as part of its black economic empowerment drive and would not pay compensation.

Zimasco held 45,900 hectares of claims before giving up half to the government, Clara Sadomba, the company’s general manager for administration told Reuters.

“It is accurate regarding Zimasco in that we have indeed ceded 50 percent of our chrome claims to the government,” said Sadomba.

Zimbabwe Alloys officials would not say whether they had also given up some of the company’s claims.

Zimbabwe holds more than 950 million in chrome reserves, according to ministry of mines data.

In 2014 Zimbabwe produced 260,000 tonnes of high-carbon ferrochrome, which was 2.3 percent of global output. Zimasco produced 68 percent of Zimbabwe’s ferrochrome in 2014.


(Reporting by MacDonald Dzirutwe; Editing by Alexander Smith)

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Bank of China targets Africa with Mauritius banking licence

Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – The Mauritius central bank said it has issued a banking licence to Bank of China, the first Chinese bank licensed to operate on the Indian Ocean island.

Zhang Xiaoqing, who is leading a team setting up the Mauritius unit, said Bank of China wanted to provide financial services to African businesses and serve multinationals and others doing business between China and Mauritius.

Bank of Mauritius Governor Ramesh Basant Roi told reporters on Friday the bank was expected to start operations in the next few months but did not give a date.

Mauritius has a growing financial industry and has been promoting the territory as a base for businesses working in Africa and beyond.


(Reporting by Jean Paul Arouff; Editing by Edmund Blair and Alexander Smith)

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Chinese President Xi Jinping Tours Middle East

Comments (1) Featured, Middle East, Politics

Xi Jinjpin Middle East

Chinese President Xi Jinping has completed a three-nation tour of the Middle East intended to strengthen political and economic ties with the region

Chinese President Xi Jinping has completed a three-nation tour of the Middle East, as the world’s second-largest economy seeks to strengthen economic and political ties with the region, and promote its status as a rising power to foreign and domestic audiences.

Energy deals in Saudi Arabia

President Xi’s first stop was Saudi Arabia, China’s biggest supplier of crude oil and its biggest trading partner in the MENA region. During the trip, Xi and King Salman bin Abdulaziz signed 14 agreements focused on energy, culture, and industrial cooperation, and pledged to build a comprehensive strategic partnership for better bilateral ties.

Xi also visited the King Abdullah Petroleum Studies and Research Center, a non-profit institution focused on research in energy economics, policy, technology, and the environment. And he attended the opening ceremony of the Aramco Sinopec Refining Company (Yasref), a joint venture between Saudi Aramco and China Petrochemical Corp (SINOPEC). This venture is China’s largest investment in the region, and looks set to continue to be so, as the two companies signed a framework agreement for strategic cooperation estimated to be worth between $1 billion and $1.5 billion.

Stimulating Egypt’s economy

After energy deals in Saudi Arabia, Xi then travelled to Egypt to meet with President Abdel Fattah el-Sisi, where the pair signed a five-year outlining document to advance their relationship. The Chinese president also announced his country’s intent to participate in key Egyptian projects, including the development of the Suez Canal Corridor and the construction of a new administrative ­capital.

Xi also announced a $1 billion financing agreement for Egypt’s central bank and a $700 million loan to the state-owned National Bank of Egypt, as he looks to support Egypt’s path to economic prosperity. In total, officials from the two countries signed 21 deals spanning development, electricity, transportation, and infrastructure. In a joint statement, President Xi said: “The total investments in these projects would be $15 billion. These projects will offer a new impetus to the economic development of Egypt”.

Increasing trade in Iran

Xi Jinping with Iranian President Rouhani

Xi Jinping with Iranian President Rouhani

Finally, Xi visited Iran; a display of even-handedness in the light of tensions between Iran and Saudi Arabia in recent weeks. The visit also landed just days after sanctions against Iran were lifted, following the UN’s announcement that the country had scaled back its nuclear program. China had been one of the six nations involved in negotiations.

Over recent years, China has been the top buyer of Iranian crude oil and Iran’s biggest trade partner, counting for more than a third of its foreign trade. The lifting of the sanctions will secure the future of that business relationship. Iranian officials confirmed that the country was preparing to raise oil production by 500,000 barrels per day. Iranian President Hassan Rouhani hopes to further boost this relationship, hailing a “new chapter” in relations with China and announcing that the two countries will be building stronger economic ties over the next decade. He comments: “We are happy that President Xi visited Iran after the lifting of sanctions. Iran and China have agreed to increase trade to $600 billion in the next 10 years,” he said. The two leaders also signed 17 agreements in areas including energy, trade, industry, environment, technology, politics, security, and cooperation on peaceful nuclear energy.

Showing China’s economic muscle

During his trip, Xi pledged $55 billion in loans and investments to the Middle East region as a whole, including $15 billion designated as special loans for industrial projects in the Middle East, $10 billion for commercial loans to boost cooperation in the energy sector, and another $10 billion as preferential loans. In this show of economic muscle, he also pledged $300 million to boost China-Arab law enforcement cooperation, and committed a final around $20 billion to setting up a common investment fund with Qatar and the United Arab Emirates. Xi also pledged HK$273.4 million in humanitarian aid for Syria, Jordan, Lebanon, Libya, and Yemen.

But while the tour undoubtedly had significant economic consequences, particularly at a time of economic difficulty and plummeting oil prices in the Middle East, it also seems to be part of a broader Chinese strategy intended to strengthen diplomatic ties with the region. During his trip to Egypt, President Xi delivered a speech outlining China’s new Middle East policy, which included making a commitment to building peace and development in the region, and supporting industrialization and stability. This speech followed the publication of China’s first Arab Policy Paper, a “blueprint for China-Arab mutually beneficial cooperation, [which] reiterates the political will of commitment to peace and stability in the Middle East, in order to promote China-Arab relations to a new and higher level.” It signifies that China will no longer be taking a back seat.

The trip is likely also linked to Xi’s “One Belt, One Road” initiative, a rebuilding of the Silk Road trade routes of the Han dynasty. Xi intends to link China and Europe via Central Asia, West Asia, and the Middle East, with the help of Chinese-funded infrastructure.

And with that many interests to protect, it seems China has good reason to invest more time and money in its relations with the Middle East.

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Sinochem signs 10-year deal to buy oil from Angola’s Sonangol

Comments (0) Africa, Business, Latest Updates from Reuters

BEIJING/LONDON (Reuters) – China’s state-run Sinochem Group said on Wednesday it had signed a deal with Angolan state-owned producer Sonangol to buy crude oil for more than 10 years.

The statement on the Chinese company’s website did not give details of the supply amount or other financial details, but trading sources said the agreement was for four or five cargoes per month, which would make the company one of the largest holders of monthly contracts to buy Angolan crude.

There are currently around 15 cargoes given to these so-called term buyers each month from Angola’s export programmes of roughly 55 cargoes.

The deal is a coup for Angola, as OPEC members fight for market share, particularly in China, the world’s largest energy consumer.

While payment terms were not disclosed, sources said the deal directly related to loans that the Chinese government has given to Angola as its commodity-reliant economy struggles with the more than 60 percent drop in crude oil prices over the past year.

Along with the chairman of Sonangol, Angola’s financial minister, Armando Manuel, was present at the signing of the deal, as was Zheng Zhijie, president of China Development Bank.

A year ago, China agreed to lend Sonangol $2 billion to expand oil and gas projects, and Angolan President Jose Eduardo dos Santos was in China in June seeking a two-year moratorium on debt repayments along with financing for a variety of projects, including a $4.5 billion hydropower scheme.

But the deal is also likely to push out another term contract holder, sources said. Sonangol has to trade some of its oil on a spot basis in order to establish prices for term agreements.


(By Chen Aizhu and Libby George. Editing by Christian Schmollinger and David Holmes)

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Nigeria hopes to reach rice mill deal with China by year-end

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria hopes to reach a deal with China within weeks to set up 40 rice mills, its new agriculture minister said, as part of plans to eliminate the need for any imports of grain within two years.

Audu Ogbeh said in his first interview since taking office last week that Africa’s top oil exporter wants to boost production of tomatoes, soy beans, nuts and plant two million cocoa trees to reduce an annual food import bill of $20 billion and create jobs for its impoverished youth.

President Muhammadu Buhari, who took office in May on a campaign to usher in a new era for a country hit by corruption and mismanagement, wants to boost the agricultural sector and end reliance on oil exports after a plunge in crude prices.

That will be an uphill challenge as pot-holed roads hamper the transport of goods. Nigeria has tens of millions of farmers but the vast majority of them work on a subsistence basis and live on less than $2 a day.

As a first step, the new government hopes to reach by year end a deal with China to import equipment to build rice mills, Ogbeh said late on Thursday.

“The federal government plans 40 mills with the Chinese spread across the country, each capable of milling 100 tonnes per day,” Ogbeh said.

He declined to give more details on the talks, which began under the previous administration led by President Jonathan. Chinese state media and a Nigerian government document obtained by Reuters have said the oil producer was talking to China’s state Import and Export Bank.



Ogbeh said Nigeria wanted to be self-sufficient in wheat in three years, confirming a Reuters report earlier this month citing a confidential government paper.

He said Africa’s biggest economy had a similar goal for cashew and cocoa, while the government also wanted to ramp up farming of soy beans, groundnuts, bananas and tomatoes within the next three years.

Nigeria produced 3 million tonnes of rice last year, along with 64,000 tonnes of wheat, United States Department of Agriculture (USDA) figures show.

But it still needed to import 2.3 million tonnes of rice in 2012  — a record high, according to the latest U.N. statistics which also show some 4.1 million tonnes of wheat was brought into Nigeria in the same year – nearly double the amount imported in 2000.

Ogbeh said he also had plans to improve Nigeria’s position as the world’s fourth largest cocoa producer by planting at least two million cocoa trees – in 27 of the country’s 36 states – annually for the next three years. The minister said the same number of cashew trees will be planted over that period.

To attract more young people into farming, the new government plans to retain a policy it inherited, through which farmers could receive central bank loans at a rate of 9 percent, as opposed to borrowing from commercial banks at around 18 per cent.

The prospect of little financial reward has led to the average age of a Nigerian farmer rising to around 65, said Ogbeh, since many young people find the work unappealing.

He also said he was in talks with the minister of education to allocate at least an acre of land to each of some 12,000 students at the country’s three agriculture universities during their studies to gain farming experience.


(By Alexis Akwagyiram and Felix Onuah. Writing by Alexis Akwagyiram; Editing by Ulf Laessing and William Hardy, Reuters)


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