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China to Loan Guinea $20 Billion to Secure Aluminum Ore

cirr

cirr

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China to Loan Guinea $20 Billion to Secure Aluminum Ore

Sept. 6, 2017, at 10:26 a.m.

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By Saliou Samb

CONAKRY (Reuters) - China agreed on Wednesday to loan Guinea $20 billion over almost 20 years in exchange for concessions on bauxite, an ore of aluminum which the West African country has in abundance, the mines minister said.

The projects guaranteed by the loan included China Power Investment Corp's (CPI) planned alumina refinery and Aluminium Corp of China's <601600.SS> (Chalco) bauxite mine and another bauxite project by China Henan International Cooperation Group, all of them in the northwestern town of Boffa.

"Those are the three projects targeted as priorities for the first phase," Mines Minister Abdoulaye Magassouba told Reuters. "The revenues these projects generate will serve as reimbursement for the loans."

The minister said the money would be spent on badly needed infrastructure - Guinea is one of the world's least developed countries - a roads-for-minerals formula that China often uses to gain access to Africa's resources.

Projects earmarked included roads in the capital Guinea and highways upcountry, a project for extending the port of Conakry, an electric transmission line and the building of a university, Magassouba said.

Chalco said last month it plans to invest $500 million in the project in Boffa, about 200 kilometres from the capital Conakry, which was abandoned by BHP Billiton in 2013. The $6 billion CPI alumina project has been on the cards since at least 2012.

Guinea, Africa's leading bauxite producer, holds some of the world's richest bauxite and iron ore deposits, including the Simandou iron ore deposit, in its remote east, which is mired in legal disputes but has nevertheless attracted intense interest from China.

https://money.usnews.com/investing/...an-guinea-20-billion-in-exchange-for-minerals
 
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Guinea is smart.

China's demand for a particular resource is limited.

For example, China is not interested in buying more natural gas (due to the existing contracts with Turkmenistan). The Russians wanted a higher price for their natural gas and missed out completely on the Chinese natural gas market.

Not wanting to repeat their mistake in natural gas, the Russians are currently competing with the Saudis for the Chinese oil market.

The story is repeated with iron ore. China buys vast quantities of iron ore from Australia and Brazil. China is not interested in further suppliers of iron ore.

China buys copper from the Congo and Peru. Chinese demand for copper has been met and sellers have to look elsewhere.

Once Chinese demand for a metal or petroleum product is filled, a seller has to search for another big buyer. However, the Chinese market is especially attractive for three reasons.

1. China pays in hard currency. China has a $3 trillion foreign exchange reserve and pays in US dollars.

2. China honors its contracts. China negotiates diligently prior to signing a contract. After a contract has been signed, China adheres to the contractual terms. Other countries break their contracts. Just ask Turkmenistan and their natural-gas-supply contract with Russia's Gazprom.

3. China's market-demand is probably the world's largest for natural resources. The US has plenty of natural resources and doesn't have to buy from overseas. An example is the American Butte Montana copper mine that is one mile long.

Thus, Guinea has found a Long-Term and Reliable Chinese buyer for its aluminum ore that pays in Hard Currency. It's a sweet deal for Guinea.
 
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Venezuela engaged in excessive socialism and their economy is a failure. It has nothing to do with Chinese deals with Venezuela.

Kenya needs transportation. China provides a 2% interest rate for "Friendship" projects to developing countries over 20 years. The grace period is 7 years before the first payment is due.

Kenya has two choices. Firstly, Kenya can stay an undeveloped country. Kenya has been undeveloped for 100 years.

Secondly, Kenya wants to change and obtain a functioning railway. Kenya cannot obtain a 2% interest-rate loan from Western banks. Given Kenya's B+ international credit rating, the market interest rate would be significantly higher than China's 2%.

In conclusion, China offered a very good deal to Kenya.
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China EXIM Provides USD 1.6 Preferential Credits for Nairobi-Mombasa Railway

"China Exim Bank provided $1.6 billion concessional loan and a commercial loan of $1.633 billion for a total of $3.233 billion. The $1.6 billion concessional loan is good for 20 years at a 2% interest rate and a payment period of 13 years with a 7 year grace period (project #31777)."

1Em8xpQ.jpg
 
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square said:
its not thst way....

lets say you earn 30k per month.....
went to a bank and asked for a loan....bank suggest you a swift ,...
.but china does it differently.....they will suggest you a AUDI....

why ?
coz they eye at your beautiful house...

typical sahukaar.......

next example.....

SRILANKA !!!!
Click to expand...
It's actually pretty simple. Kenya wanted to sign the contract. They always have the option of walking away.

Thus, Kenya thought it was in their best interest to sign a 2% interest-rate deal from China. These special "Friendship" projects are rarely offered by China. The Friendship projects are designed to provide developing countries with power (such as dams), transportation (such as railways), and communications (such as satellites).

If a country does not want China's help in building dams, railways, or satellite communications, they can always say "no."

A country can always borrow the money for a project from a western bank at market interest rates.

Kenya chose China over western bank financing. That decision was made by Kenya.
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Another good example is Nepal.

China offered a generous dam for Nepal at a Friendship price.

The Nepalese legislature said they wanted to review the entire project.

China said that the Friendship offer was only good for 30 more days. Since the project had already been reviewed, there was no need for a second review. China basically said: "you can take it or leave it." Review all you want, but Nepal will have to obtain financing itself at market rates from banks.

The Nepal legislature decided to forego a second review and quickly signed the Chinese Friendship dam deal before it expired.

Nepal Lawmakers Approve China Dam Project | The Wall Street Journal

x9qZz8C.jpg
 
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There are four compelling reasons for nations to sign a Friendship project with China.

1. China's big-ticket items cost less than comparable western technology. A Chinese hydroelectric dam, with the same specifications as a western dam, costs 10% less. For a billion-dollar-plus project, a 10% discount is a lot of money.

Another example is a Huawei mobile-phone base station. For the costs of two Ericsson base stations, a country can buy three Huawei base stations. The Huawei base station matches (or has superior performance compared to) the Ericsson base station.

Thus, China's price is lower and this means tremendous savings for the buyer.

2. China's financing terms for a Friendship project is hard to beat. The interest rate is a low 2% over a 20-year period and the grace period is seven years before the first payment. For most countries, they can't obtain a loan from a western bank. Never mind the ultra-low 2% interest rate.

3. A Friendship project is backed by the Chinese government. It will be built on-time and the Chinese government will stand behind it for the entire 20 years. For example, a Chinese-financed Nigerian communication satellite was sent into the wrong orbit. The satellite had to use some of its onboard fuel to reach the proper orbit. This probably reduced the lifetime of the communication satellite by half. The Chinese government said it would replace the satellite at no cost.

Nigeria received a great deal. The original satellite had a reduced-lifetime of about 7 years. The replacement satellite at no cost has a 15-year lifetime. With the Chinese government's implied warranty, Nigeria received 22 years-worth of satellite function for the cost of a 15-year satellite purchase.

In contrast, western companies like Westinghouse can go bankrupt. After filing for bankruptcy, the project is the buyer's problem. Thus, purchasing a big-ticket item like a dam, railway, or nuclear power plant from a western firm always carries the risk that the supplier may file for bankruptcy at some point in the future.

Obviously, the Chinese government isn't going anywhere and stands behind all big-ticket Chinese overseas projects.

4. Sometimes, the US government plays political football with overseas contracts. A country always faces the threat of sanctions from the United States. For example, Iran spent a lot of money to buy a fleet of F-14 Tomcat jet fighters from the United States. The US government decided it would not supply F-14 replacement parts to the new Iranian government.

I think the current list of sanctioned countries by the US includes Venezuela, Yemen, Iran, Syria, North Korea, and probably a lot more. Also, the US government has a law forbidding the sale of satellite parts to China (because the US doesn't like China as a competitor).

Thus, buying a big-ticket item from the US runs the risk of withheld parts whenever the US government doesn't like you. I think Egypt's military government is sanctioned by the US. Probably Thailand's military government is also sanctioned.

Let's see, South Africa was sanctioned for years over Apartheid. Similarly, Colombia was sanctioned for years for drug-lord influence over the government.

Anyway, the point is that over a 20-year period, there is a chance the United States government will sanction your country for political reasons. This means the necessary replacement parts could be withheld, which would render a country's billion-dollar project inoperative.

In conclusion, many countries sign Friendship projects with China for four main reasons. Chinese technology costs about 10% to 33% less than comparable western technology. China's 2% interest rate and finance-terms are hard to beat. The Chinese government stands behind its products and cannot go bankrupt like Westinghouse. Finally, the Chinese government has never withheld parts for a large overseas project. Therefore, other countries keep signing Friendship projects with China because it's a great deal.
 
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square said:
avoid unnessesery troll and try find answeres.....
technology has given you oppertunity to look around and search .......


China’s Hand in Venezuela’s Nightmare | China Unc…:
Click to expand...
Your bold n simple statement has already been refuted by also an equally-bold n simple question.

I repeat:

Do u blame your bank when u're the 1 who requested for a personal loan?

Remember, your bank doesnt care about HOW u've spent the money u borrowed from him- that's not his problem. No one pointed a gun at your head n demanded u to borrow from him. He only cares about the terms of your repayment.

Hence, refrain from regurgitating the same cud all over n over again.
 
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eldarlmari said:
Your bold n simple statement has already been refuted by also an equally-bold n simple question.

I repeat:

Do u blame your bank when u're the 1 who requested for a personal loan?

Remember, your bank doesnt care about HOW u've spent the money u borrowed from him- that's not his problem. No one pointed a gun at your head n demanded u to borrow from him. He only cares about the terms of your repayment.

Hence, refrain from regurgitating the same cud all over n over again.
Click to expand...

there is a difference between a bank & a sahukaar....
 
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shadows888 said:
Why don't you guys compete and give them better deals?
Click to expand...

Compete with China? With What? Political will? Financial mussle? Tech know-how? Project design, planning and management? Experience? Execution? Dilligence dedication and hard-working spirit?

Not to mention manufacturing prowess, supply chain efficiency and other mundane things.:D:D
 
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square said:
there is a difference between a bank & a sahukaar....
Click to expand...
Refrain from using an alien language(or self-translate it)
If u want ppl to know what you r talking about

cirr said:
Compete with China? With What? Political will? Financial mussle? Tech know-how? Project design, planning and management? Experience? Execution? Dilligence dedication and hard-working spirit?

Not to mention manufacturing prowess, supply chain efficiency and other mundane things.:D:D
Click to expand...
None of the above when their work cultural norm includes:

1)short hrs
2)sleeping on the job
3)procrastinating attitude
4)excessive 'chai masala breaks'
5)excessive 'beedi or cigarette smoking breaks'

The main thought occupying their noggin during work, is to wait for the workday to quickly come to an end so that they can go home to jerk off to desi **** featuring fair-skinned bhabis or IMWF scenes after sipping off their nimbu pani.

1 look at their 34 year old Tejas plane n the amount of SP planes they have produced so far since 2016 dec- gives u a gd picture.

They r lazy n unproductive(except at making babies).
 
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