China Loans Guinea $20 Billion In Exchange For Minerals

Having already taken over Venezuela with billions of pre-petition Debtor in Possession loans to the soon to be insolvent nation, China has franchised its model of financial colonialism, perfected over the decades by the IMF and World Bank, and on Wednesday agreed to lend Guinea $20 billion for 20 years in exchange for concessions on bauxite, an aluminum ore of which the West African country has vast resources the country's mines minister said.

Having bypassed conventional international lenders such as the IMF for various reasons, the African nation demonstrated that when it comes to commodity-rich African nations, the (financial) world is unipolar, and the pole goes right through Beijing.

According to Reuters, the projects guaranteed by the loan included China Power Investment Corp’s (CPI) planned alumina refinery and Aluminium Corp of China’s (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.”

According to the Mines minister, proceeds from the Chinese loan would be spent on badly needed infrastructure - Guinea is one of the world’s least developed countries - including 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. The Chinese loan represent a "roads-for-minerals" formula that China often uses to gain access to Africa’s resources.

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. Meanwhile, China's interest in the Guniean aluminum goes back at least to 2012 when CPI first unveiled the $6 billion CPI alumina project.

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. China, which has been one of the world's largest users of aluminum, has been eager to secure long-term access to aluminum's key ore.

And while this latest attempt to internationalize the Yuan is notable, if hardly unique, it pales in comparison with the recent report that China will shortly launch a crude oil futures contract priced in yuan and convertible into gold, in what analysts say could be a game-changer for the industry.

The contract could become the most important Asia-based crude oil benchmark, given that China is the world's biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.

As the Nikkei summarized, "China's move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong." In short, as the US lurches from one crisis to another, China continues to covertly upstage not only established "developed world" institutions like the IMF and WB as lender of only resort, but also the (petro)dollar as the world's reserve currency.

Comments

Vimes Laughing.Man Wed, 09/06/2017 - 17:28 Permalink

It would seem so, if you consider the current US situation. However, in the past this type of investment lost out simply because someone who had a big gun walked in and took it. The  English were very good at this, but so were the French, Spanish and the Portuguese. So the need for an army is quite reasonable, it is unfortunate that the corruption is destroying the system from within. 

In reply to by Laughing.Man

TheGardener Peak Finance Wed, 09/06/2017 - 17:04 Permalink

Have or steal that mineral wealth ?Bauxite ore is usually processed into aluminium near by and is a cheap energy dependent play.20 billion entry fee for what is to come on follow up investments on power plants and processing .Surely some colonial investment worth protecting for : this is how regions of interest became colonies to protect the investmentsof your nationals lobbying for just that in the 19th century. Not exactly of what you have been taught at school : colonialist never ever wanted to rule over those hapless and most usually useless locals just for the sake of it and out of cruel dominating fantasies.All they ever wanted was secured resource extraction and being liable for the unruly locals always just a nuisance.  

In reply to by Peak Finance

css1971 Wed, 09/06/2017 - 16:38 Permalink

Wait...China loans Guinea money, so that China can gain access to Guinean resources. Or, put another way... Guinea indebts itself so it can give access to it's resources...So who in the Guinean government got the Ferrari then?

OverTheHedge Thordoom Wed, 09/06/2017 - 17:00 Permalink

Even better, Guinea will now be beholden to China for the next 20 years. China gets to dictate government policy in all their satellite states, or they run the risk of being bankrupted Provided you have the funds, buying influence is probably cheaper than military action, but the MIC would never agree.

In reply to by Thordoom

Father ¢hristmas (not verified) Wed, 09/06/2017 - 16:54 Permalink

Barzini is not going to lose this thing.Told you, that cowboy bullshit is obsolete.

assistedliving (not verified) Wed, 09/06/2017 - 17:12 Permalink

China gives bigger kickbacks than we do...and the Guineans have to kickback less to boot.WIN WIN

maneco Wed, 09/06/2017 - 17:45 Permalink

Cajutel is a very interesting ICO. They are raising capital via crypto currency market in order to develop high speed internet for Guinea-Bissau and Guinea. These two West African countries are about 25 years behind in terms of access to the internet. I have made a couple of sponsored videos about the ICO. One is a review of the project and the other is an interview with the CEO Andreas Fink from Basel, Switzerland.Review:https://youtu.be/DNmx4KLrSu0Interview with CEO: https://youtu.be/zx4xL4eOKMY

radbug Wed, 09/06/2017 - 17:51 Permalink

China has "loaned" Guinea nothing! I hate it when people use nouns instead of verbs. "One doesn't "access" things, just as one doesn't "loan" money. China has "lent" 20 billion to Guinea!!!! I just hate it when people misuse the English language!!!

sinbad2 Lucky Leprachaun Wed, 09/06/2017 - 20:18 Permalink

Unlikely, I know that's how the western colonial powers have operated in Africa, but China is not as stupid. China knows that in the long term they will make more money by enriching the people(communism), so they build roads schools and hospitals. Bribing and creating oligarchs(capitalism) works in the short term, but long term creates resentment, and lower profits.

In reply to by Lucky Leprachaun

RagnarRedux Wed, 09/06/2017 - 18:58 Permalink

Asian Tells Africans They Are Stupid For Destroying What White People Built And For Learning Nothinghttps://www.youtube.com/watch?v=3LhSjLNyM-sSouth Africa: Official Zulu King Says Blacks Destroying Everything They Inherited From Whites"The National Party, he said, had built a powerful government with the strongest economy and army on the continent, but then came “this so-called democracy” in which black people started destroying the gains of the past.The king said history would judge black people harshly as they had failed to build on the successes of the Afrikaner regime."https://www.iol.co.za/news/politics/king-praises-apartheid-regime-19561…BBC: Black South African Says Life Better Under Former White Governmenthttps://www.youtube.com/watch?v=j4f0INWfws0White South African Farmers Being Murdered At 20X The International Average"Since the early 1990s, when white South Africans voted in a referendum to surrender power, the estimates of farm murders range between 2,000 and 4,000.Police figures show there have been some 15,000 farm attacks in that time period.White South African farmers are between two and three times more likely to be murdered than even South African police officers.They are also more likely to be killed than U.S. troops serving in Iraq or Afghanistan."http://www.wnd.com/2017/04/murder-rate-for-these-white-farmers-20-times…

ShakenNotStirred Wed, 09/06/2017 - 19:46 Permalink

China gives Guinea $20Bn. Now they can send 100M Chinese workers to Guinea and pay each $200/Month and return home when the job is done.The only permanent change here is Guinea will not have any Bauxite left anymore.

Drop-Hammer Wed, 09/06/2017 - 20:58 Permalink

The chinks are buying/leasing/colonizing the entire Third-World.  They have qualms or hesitancy about looking out for their own best interests as do we 'the good guys'.  Pretty soon, we will be boxed-in.