Strictly Private and Confidential

MineAfrica How important are China and Africa to each other ?

30 November 2009

Agenda

1.

BRIC’s and Africa 2.

China and Africa 3.

Standard Bank : Africa & China 4.

Case Study 5.

Conclusion 17 20 22 3 9 ‹#›

BRIC’s and Africa

‹#›

Democracy ?



The region evolved from a few elected governments to near complete democracy today

‹#› 

Positive changes in the socio-political environment across the entire region

Elected governments in 1986 Elected governments in 2009

Elected governments

BRIC-Africa trade

1980 1990 2000

‹#›

2008

Sources: International Monetary Fund, Standard Bank Group

China flows

‹#›

180 150 120 90 60 30 USD8 bn 0 1992 1995 China 1998 India 2001 Russia 2004 Brazil USD166 bn 2007

Sources: International Monetary Fund, World Trade Organisation, Standard Bank Group

Africa snapshot Economist, May 2000 Inflation

20 % 15 10 5 0 -5 2002 US 2003 EU 2004 Africa 2005 CIS 2006 2007 Developing Asia 2008 2009f Western Hemisphere

Average real GDP growth

% 15.0

10.0

5.0

0.0

-5.0

-10.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009f US EU Africa CIS Developing Asia Western Hemisphere

Reserves

3,200 USD bn 2,400 1,600 800 0 1999 2000 2001 2002 Africa CIS 2003 2004 2005 Developing Asia 2006 2007 2008 Western Hemisphere 2009f ‹#›

Africa snapshot Current Account

18.0

% of GDP 11.0

4.0

-3.0

-10.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009f US EU Africa CIS Developing Asia Western Hemisphere

FDI

160 USD bn 120 80 40 0 2001 2002 Africa 2003 CIS 2004 2005 Developing Asia 2006 2007 2008 Western Hemisphere 2009f

External Debt

70 % of GDP 55 40 25 10 1999 Africa 2000 2001 2002 2003 Developing Asia 2004 2005 2006 Central and Eastern Europe 2007 2008 2009f Western Hemisphere

Fiscal Balances

8.0

% of GDP 2.0

-4.0

-10.0

-16.0

2001 US 2002 EU 2003 Africa 2004 CIS 2005 2006 Developing Asia 2007 2008 2009f Western Hemisphere ‹#›

China and Africa

‹#›

China-Africa trade

‹#›  

60 50 40 30 20 10 0 1990 1993 1996 Africa imports 1999 2002 Africa exports 2005 2008

Sources: IMF, WTO, ISI Emerging Markets, Standard Bank Group

China is Africa’s second largest trade partner, behind the US.

China-Africa trade has grown at a CAGR of 20% since 1992, increasing from USD3.4 bn in 1992 to USD 100 bn in 2008. 10

China footprint

African exports to China (USD mn) African imports from China (USD mn)

‹#›

Less than 1mn 1 – 100mn 101 – 250mn 251 – 500mn 501 – 1000mn 1001 – 1500mn 1501 – 3000mn 3001 – 10 000mn More than 10 000mn

Sources: IMF, WTO, ISI Emerging Markets, Standard Bank Group

China’s African trade partners

Equatorial Guinea 3% Benin 3% Morocco 3% Gabon 2% Congo 4% Algeria 5% Nigeria 7% Other 19% Sudan 9% Angola 27% South Africa 18%



Sources: IMF, WTO, ISI Emerging Markets, Standard Bank Group

All African nations have benefited from increasing Sino-African ties, especially the resource abundant nations.

12 ‹#›

Chinese infrastructure projects

Guinea:

- US$1 billion investment in hydro project (515MW) by Sinohydro

Ghana:

- US$150 million to expand telephone system - Approximately US800 million investment in hydro and other power plants by CADF, Sinohydro and others

Mauritania:

-

China Minmetals Corp invested in mines and exports 1.5 billion tons of iron ore to China annually

-

430 km railway linking Nouakchott to phosphate deposits in Bofal Nigeria:

- US$2.3 billion investment in oil and gas - Approximately US$5.4 billion in roads, rail, coal power and hydro power -Shenzen Energy plans to build 3 000MW plant for US$2.4 billion

Gabon

: - As part of US$3 billion Belinga project, deep water harbour, hydro electricity, railway line to Belinga Mine -

China buys 20% of Gabon’s oil

-

Chinese companies have rights to 30 million tons of iron ore annually DRC

: -

CRG invested US$2.9 billion in copper and cobalt mining project

- CRG owns 43% of SoCo, a US$100 million mining JV - 3 500 km highway between Kisangani and Lubumbashi - 3 200 km railway linking copper belt to Atlantic - US$5 billion to modernise infrastructure and terms include mining concessions - 31 hospitals and 145 health clinics - 2 universities -

Rehabilitating mining infrastructure Angola

: -

Provides China with 10 000 barrels per day

-

Sinopec invested US$2.4 billion to explore offshore oil fields

- US$3.5 billion housing project with CITIC - US$3.2 billion infrastructure funding - roads, rail, power, water and telecoms - Bengula Railway - Luanda-Uige Bridge repairs - Housing projects - Bom Jesus Airport - Luanda General Hospital - Palace of Justice - Ministry of Finance

Botswana

: - US$ 825 millon in coal fired power project (600 mw) ‹#›

Libya: - Oil investment by Chinese oil company CNBC Sudan:

- Total investment in Sudan of US$15 billion. -

Chinese companies hold 50% of Khartoum chemical company and 100% of Sudan’s petrochemical trade project

- 4 power plants, 2 hydro projects, 1 506 kms oil pipeline, oil terminals

Burundi: - Chinese firms investment in nickel mines Ethiopia: -

US$500 million telecom network

Kenya:

-

Mobassa-Nairobi Oil Pipeline

-

Oil exploration Zambia:

-

CNMC - US$150 million in a copper mine – 30 000 ton annual production

-

CNMC and Yudan Copper Industry Group Chiambishi smelter annual capacity

- Shinyanga and Chalinze Water Projects -Tanzania/Mozambique border -

Kiwira coal mine Zimbabwe:

-

Sinosteel acquired a 67% shareholding in the country’s largest ferrochrome producer

-

Chrome, coal, platinum and iron ore mining Tanzania:

- Largest recipient of Chinese aid – US$2 billion since 1960s

Zambia-Tanzania:

- 1 900 km Tanzam Railway (1975) for US$500 million

Mozambique:

- Moamba Bridge - Mepanda Nkua Dam and Hydro-electric power

South Africa:

- ICBC investment in Standard Bank – 20% for US$5.6 billion Zijin Mining, China’s largest gold miner - stake in platinum company and partnership with Goldfields -

Sinosteel has 2 chromium mining JVs

- VRESAP – water pipeline (COVEC contributor) - Richards Bay dry dock -

Arcelor Mittal Steel coke ovens/kilns

-

Chrome / Ferrochrome

Potential railway opportunities

‹#› » Road network » 65km/km² (¼ paved) » Rail network » 2.7km/km² » 10% of the density in the USA* Egypt Railways Restructuring Project Alexandria    Real need to connect inland production facilities to ports There is also a need to connect cross-border, along the lines of Western Europe Key need to upgrade freight lines and potential for urban rail in key population centres Nigeria Railway Corp - 2 major rail lines 1. Connects Lagos to Nguru 2. Connects Port Harcourt to Maiduguri Abuja Rail Mass Transit System Lagos urban rail scheme Port Sudan Source: Standard Bank Sudan Railways Zambia Railway »Main rail connection between Livingstone, Lusaka and Copperbelt towns Lagos Kenya Railways »Links from Mombasa to Tanzania and Uganda Douala Benguela Railway »Links port of Lobito, Angola to railroads of DRC and Zambia Luanda Lobito Zimbabwe Railroad »Beitbridge to Bulawayo is private freight railway »Links to Zambia, Maputo, Beira, South Africa and Botswana Walvis Bay TransNamib »The northern extension will join up with Angola in the future »Links up to South Africa via Upington. Potential link to Botswana?

Saldana Cape Town Nqqara Transnet R40bn upgrade, PRASA R80bn upgrade Maputo Richards Bay Durban Botswana Railroad Mombasa Tanzania Railway Ltd Dar es Salaam Tazara »From Zambia, through Tanzania to Dar es Salaam Nacala Nacala Railroad »Links to the Central East African Railway of Malawi Beira Beira Railroad »Links to Zim Railroad and coal fields of Moatize Maputo Railroad »Links to South Africa then goes to Komatipoort and to Johannesburg (Maputo Corridor) »Links to SwaziRail and Zim Railroad (Limpopo Line)

Potential road opportunities

‹#›

Libya

: Road Project V (R399m) :

Morocco

: Second National Rural Roads Programme

Multiple

, Trans Africa Highway ($47bn): The 100 000-km Trans Africa highway will be made up of nine highways, passing through 41 cities in sub-Saharan Africa and connecting about 500-million people. Cairo Dakar Algiers-Legos Ttipoli-Windhoek-Capetown Cairo-Gaborone-Capetown Dakar-Ndjamena Ndjamena-Djinouti Dakar-Legos Beira-Lobite … Paved Unpaved Potential Road constructions

Nigeria/Ghana

: Multiple road PPPs under development (e.g. Abuja, Accra-Kumas).

Cameroon

: The project will involve the development of the Douala Bangui and Douala-Ndjamena road corridor, linking Cameroon, the CAR,

Gabon:

Road Project “RP1”, Multiple road constructions

South Africa

: N1/N2 Winelands toll highway project: Construction and upgrading of roads and associated infrastructure

South Africa, GFIP

: A long term freeway upgrade and expansion project by SANRAL involving 561Km of highways

Multiple,

Northern Corridor: Will connect Kenya with Uganda, Southern Sudan, Rwanda, Burundi and the Democratic Republic of Congo.

Kenya / Nairobi Toll Road Tanzania,

Road Upgrade Project

:

Aimed at improving essential road transportation services between Dodoma, Singida, Babati and Arusha

Multiple,

North / South Corridor: Will connect South Africa with Zimbabwe, Botswana, Malawi, Zambia, the DRC and Tanzania.

South Africa / Mozambique

: N4 corridor development initiative

DRC:

Road Rehabilitation Project. Under a draft accord signed between China and the DRC, China plans to lend the DRC $5 billion to upgrade its ageing infrastructure Source: Standard Bank

Potential port opportunities

‹#› Matadi Line »Under construction by Chinese contractor »Will link terminating line at Sakania to the Congo River deepwater port of Matadi »Completion scheduled for 2010 Nigeria » Apapa/Lekki Port Development »Lagos free trade zone »Roads and airport – US$6 - 8 billion investment Over next 5 – 8 years Port Sudan Mchinji line » 799km line under construction by SDCN consortium at cost of $350m » 15 year rail concession granted to SDCN » Future plans to connect to TAZARA line have been mentioned Lagos Douala Expanded Mombasa port Matadi Port »Talks underway to finance the restoration of 4 quays estimated at $51m Luanda Port »Investment of $130m over next 4 years to upgrade and modernise Lobito Port »Port rehabilitation program funded by World Bank Benguela Railway »Currently being repaired by Chinese contractor (China International Fund, $300m contract) Walvis Bay port development Luanda Lobito Walvis Bay Beira Mombasa Dar es Salaam Saldana South Africa port development Cape Town Saldana, Cape Town, Ngqura and Durban (R26 billion) Ngqura Maputo Richards Bay Durban Nacala Expanded Dar es Salaam port Nacala Port »Concession: SDCN (15 years) Beira Line »Machipinda line operational »Rehabilitation on Sena line expected to be completed by 2009 »Beira coal terminal (completed by 2012) Maputo Port »Dredging of harbour, upgrading and re-alignment of road and rail networks Source: Standard Bank

Standard Bank :Africa & China

‹#›

Unrivalled presence in Africa

‹#›  Over 143 years of experience in Africa  Largest bank in Africa – Over 40 000 employees in Africa – Headquartered in Johannesburg  Growth on the continent is a key strategic focus area  Investment banking presence across the region and in key markets strengthened by recent acquisitions: – IBTC Chartered Bank, Nigeria – CFC Bank, Kenya Standard Bank     

Angola Botswana DRC Ghana Kenya

    

Lesotho Malawi Mauritius Mozambique Namibia

    

Nigeria South Africa Swaziland Tanzania Uganda

 

Zambia Zimbabwe



Unrivalled knowledge of sub-Saharan Africa



On-the-ground presence in 17 countries

Aspiration: key emerging markets

‹#›     Largest commercial bank in China – Assets of over US$1.3 trillion Over 16 000 domestic branches Nearly 100 international branches, with representation in Almaty, Busan, Frankfurt, Hong Kong, London, Luxembourg, Macau, Moscow, New York, Seoul, Singapore, Sydney and Tokyo Listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange Standard Bank is a premier South African-based financial services group operating in emerging markets:  Global reach on the ground in 40 countries with distribution capabilities in the world’s leading financial centers including New York, London and Hong Kong          

Key regional offices

 Offices in key regional financial centers including London, Moscow, New York, Sydney, Hong Kong and Dubai, Shanghai, Beijing   Corporate and Investment Banking emerging markets around the world (“CIB”) provides corporate and investment banking services to corporate clients, financial institutions and international counterparties focused on Standard Bank’s relationship with ICBC (20% strategic equity interest in Standard Bank) provides Standard Bank with further international reach and strengthens Standard Bank’s access to what may soon be the world’s largest economy

Morupule B Case Study

‹#›

Morupule B Power Plant

Standard Bank

US$140m Guarantee Bridge

Ministry of Finance Guarantee

US$825m

ICBC BPC

US$140m Bridge 9 month

Sinosure Guarantee

‹#›

Sinosure Guarantee World Bank Partial Credit Guarantee

16 – 20 year

ICBC

US$825m 20 year loan Currency Basis Risk hedging

Standard Bank

15 year Political/ Commercial cover Loan balance

World Bank Partial Credit Guarantee

0 years 15 20 Source: Standard Bank

Conclusion

‹#›

What does this mean ?

1. BRIC at this stage is dominated by China 2. The world is being remade; the BRICs and Africa are at the helm of shifts to the emerging south 3. Seismic shifts mean it is now the BRICs and Africa, rather than the BRICs in Africa 4. The story of the BRICs and Africa has only just begun 5. The BRICs are reversing Africa’s marginalised position in world trade 6. Africa must seize the moment to ensure it benefits proportionately from relations with the BRICs.

‹#›

Disclaimer

‹#›

Confidentiality and disclaimer

This document is provided on the express understanding that the information contained herein will be regarded and treated as strictly confidential and proprietary to The Standard Bank of South Africa Limited (“Standard Bank”), its holding company Standard Bank Group Limited, and the subsidiaries of its holding company (“the Standard Bank group”) . By retaining it the recipient undertakes that it is not to be delivered and nor shall its contents be disclosed to anyone other than the intended recipient, and nor shall it be reproduced or used, in whole or in part, for any purpose other than for the purpose described herein, without the prior written consent of Standard Bank.

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