Mining for growth

Updated: 2013-03-13 15:15

By Ding Rijia (China Daily)

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To attract more foreign investment, many African nations are actively speeding up infrastructure construction. After years of effort, they have made great progress in developing railways, highways, ports, water, electricity and communications.

Mozambique, for example, has improved and strengthened the supply of electricity in its mining investment regions, while Ghana has improved roads, electricity and communication facilities. Guinea and Gabon have improved railway systems within their territory. Sudan, Tanzania, Mozambique and Egypt have consolidated port construction. Namibia, Botswana, Zambia, Zimbabwe and Burkina Faso have improved communication and airport facilities.

Objectively speaking, the continent's mining investment environment, compared with other parts of the world, still faces many barriers, including war, corruption and political instability. Hence it is important for Chinese mining enterprises to pay attention to some important aspects before making investments.

First, investments require transparency. It is difficult to measure this when it causes damage to the local environment, especially during mining infrastructure construction, in long-term investment contracts. The investment must be reasonable, legitimate and in line with international standards. Investors need to obey the law, and keep the local populace informed about their business activities.

Second, Chinese enterprises' development goals must be consistent with the development strategy of the host country. Whether the investment can create more jobs is one of the standards that the local government often uses to evaluate a project's sustainability. If Chinese companies wish to enter the mining market, it is also necessary to consider the overall development strategy of the country.

Third, Chinese enterprises need to fulfill their corporate social responsibility to the local community. Many large-scale Chinese mining companies are building roads, schools or hospitals in Africa, which is encouraging. Chinese enterprises should also increase image promotion, so that the local people have a better understanding of them.

Fourth, political stability is the foundation and prerequisite particularly for mining investment. Hence it is important for Chinese companies to maintain constant communication with local governments.

Some African countries have also signed the Extractive Industries Transparency Initiative (EITI). This will enable investors to understand local regulations better.

The author is an economics professor at the China University of Mining and Technology in Beijing. The views do not necessarily reflect those of China Daily.

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Mining for growth


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