In bursting onto the Botswana mining sector, Chinese companies are vying with traditional Oriental rival, Japan, whose companies have also increased their presence on the Botswana mining scene.
According to the Chief Geologist at DGS, Johannes Tsimako, Chinese companies are being drawn to Botswana by the need to source and develop raw materials for their own industries. Thus, the major minerals Chinese companies are exploring for are copper, nickel, uranium and coal, among others.
"The key attraction is the need for raw materials for their own industries," Tsimako says. "They need to increase their supplies of metals - lead, zinc and other minerals. The Chinese are venturing into areas which have huge potential for exploration and development of these resources." Data trends from the DGS show that while a few years ago Chinese companies were content with holding equity or being in joint ventures with exploration companies in Botswana, they now focus on full control of their exploration activities.
"They are after ownership of the company exploring, perhaps because of the challenges they have experienced in joint ventures," Tsimako points out. "The Chinese companies would prefer to hold 100 percent equity in the company holding ground and would rather own the exploration licence themselves. Even if they bought into an existing company, they would want to take it over."
It is understood the Chinese private companies are partly encouraged by government funding. These companies are being empowered to source and develop raw materials in response to demand in their home country which has declined marginally this year due to the global recession. Import demand in China has been driven by that government's multi-billion US dollar stimulus plan designed to maintain development growth despite the reduced export earnings due to weaker international markets. With Botswana fast emerging as the new uranium destination, Chinese companies are eager to move into this sector and satisfy the huge demand for energy in their country. It is reported that China has a state-approved plan to improve its power generation capacity, which will drive up demand for uranium for reactors. China currently has 12 nuclear reactors under construction, with another 33 planned and another 80 proposed. By January last year, the Oriental giant had 11 operating nuclear reactors.