India has a long history with numerous mineral-rich African countries, including South Africa, Namibia, Zambia, and Tanzania. No other Asian country will be able to claim this. Even still, India is at least a decade behind China in terms of securing mineral riches on the African continent in a systematic manner.
The diplomacy that China practises there by supporting economic development through liberal grants and aid has made it easy for its government-owned and private enterprises to become dominant owners of industrial minerals and energy resources in many African countries, including those riven by unending civil wars. While considerable economic support has helped, the fact that the Chinese and African economies are complementary in many respects has set the conditions for China to gain vast swaths of resources of all types in that continent. More than China's resource acquisition, the US and other Western countries are concerned about China's growing political influence in Africa.
Anil Agarwal, chairman of Vedanta Resources, said, 'China's interest in resources in Africa and elsewhere is logical. From steel to aluminium to copper, the country accounts for half or more of world output in each commodity. Consider the ratio of China's mineral resource reserves to output, which represents the 'burn rate' of known reserves. It remains in the red zone for future domestic supplies of iron ore, bauxite, and so on to fuel its massive combined capacity facilities.'
Furthermore, since the processing of lower grades of Chinese iron ore and bauxite raises the cost of metal production, the country is forced to rely more and more on imports, according to Agarwal. The country produced 32 million tonnes (mt) of aluminium out of a global total of 58 mt, forcing it to increase bauxite imports by 54% to 55.8 mt. Despite the fact that Chinese steel output fell by 2.3% last year to 803.8 mt, the country imported 2.2% more iron ore, totaling 953 mt. China accounts for over 70% of worldwide seaborne iron ore commerce.
In comparison to China, India, which aims to increase steel production to 300 mt by 2025 from 118.2 mt and, according to Agarwal, has the resources to increase aluminium smelting capacity to 20 mt from 4.129 mt, presently possesses relatively substantial quantities of high-quality iron ore and bauxite. Agarwal believes that the recently announced national mineral exploration policy, which encourages private investment, including foreign direct investment by high-tech exploration companies, will result in the progressive expansion of reserves of not only iron ore and bauxite, but also high-value bearing minerals such as diamond, gold, copper, and zinc.
Regardless of how large our natural resource endowments are, India should not pass up opportunities to acquire reserves overseas, notably in oil and gas, coking coal, copper, nickel, and zinc.
'There is a big amount of goodwill for India all throughout that continent,' adds Agarwal, who has spent close to USD 5 billion in African countries ranging from Zambia to Namibia, South Africa, and Liberia since 2004. Many Indians have settled in African countries, and their contributions to the local economy and societal development are valued. Africa seeks investments in the prospecting and exploration of energy and mineral resources, as well as the development of mines and infrastructure. Opportunities in Africa remain ample for India.'
Vedanta, which has a growing portfolio of downstream mining and metals operations in Africa, has had a gratifying experience. 'We are in the midst of establishing another Hindustan Zinc in its post-disinvestment form through the USD 1 billion Gansberg project in South Africa's Black Mountain Mining region. Gansberg contains one of the world's biggest zinc resources, with reserves conservatively estimated to reach 130 million tonnes 'Agarwal explains. It's past time for other Indian groups to make similar advances in Africa as Vedanta has.