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China to spend extra $300 mln in Zambia

Filed on June 26, 2007

LUSAKA - China will invest an additional $300 million in Zambia’s mining and manufacturing industries, a government minister said on Tuesday.

Commerce and Trade minister Felix Mutati said the money was in addition to the $900 million China has pledged to the Multifacility Economic Zone (MFEZ) in the Copper Belt town of Chambishi, 420 km north of Lusaka over the next four years.

Chinese and Zambian authorities have signed investment agreements which would see the creation of a cement plant, an acid plant and smelter for a new nickel mine in the south, as well as a fertiliser production factory, at a cost of $200 million.

Zambia and China had also agreed to construct a new $100 million high-technology economic zone on the outskirts of the capital Lusaka where television sets, cell-phones, radios and other electronic items would be manufactured.

‘The Chinese ... want to start manufacturing some of the items from Zambia instead of just importing raw materials,’ Mutati told Reuters in an interview.

Analysts say that Chinese interests in Zambia have expanded from copper and cobalt mining to other sectors of the economy as a result of tax exemptions offered by Lusaka.

Mutati said resource-hungry Chinese firms would also use the smelter, to be constructed in Mazabuka district, 140km south of Lusaka, to process nickel from Botswana and Tanzania.

‘They plan to have everything here ... so that raw materials needed for their industry can be fed from these plants,’ he said.

The Chinese would start work on the two economic zones in August, Mutati added.

‘We anticipate that the economic zones will be functional by 2010. In Chambishi, 60,000 jobs will be created while less than a thousand jobs will be created in the high-tech economic zone. Many more jobs will be created in southern province,’ said Mutati.

In Chambishi, the Chinese planned to construct a copper smelter and other projects in mining and agriculture.

Authorities had agreed to orient the Chinese on Zambian labour laws and culture to avoid tensions similar to those which forced Chinese President Hu Jintao to cancel a trip to Chambishi during a visit to Zambia in 2006.

Zambia’s opposition and labour unions accuse the Chinese of failing to observe safety standards and of paying workers salaries below the government minimum wage threshold of about 70 Zambian kwacha.

‘There are some things they need to learn and they have told us they are willing to do so,’ Mutati said, adding that Zambia had opened its doors to Chinese investors because ‘they are different from the West and tend to be quicker in transactions which make sense.’

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