Cape Town - China's role in Africa's mining sector is exaggerated, declared an acknowledged expert at the annual Mining Indaba conference.

Chinese control over mining production in Africa is "almost nothing" compared even with that of South Africa, said Professor Magnus Ericsson, co-founder of the international Raw Materials Group (RMG) consultancy.

Ericsson does not agree that China is taking over the world. This is an oversimplified view, he said in response to submissions by other experts during the Indaba.

Africa's mines are still being controlled by old colonial powers, by the US and by Australia, he told Sake24. Although it is often held that the Chinese are devouring Africa's resources, the economic giant's mining investments on the continent are actually small. China's total foreign investments are colossal, but it is concentrating on mining sectors in Australia and Canada more specifically than on those in Africa.

Many of the areas in Africa where Chinese companies are active, are areas where it has actually been forced in by other companies' monopoly on large parts of the world's resources.

China invests in places which, for political or logistical reasons, are unattractive to the large international groups, says Ericsson.

Where legislation and regulatory institutions are in place Chinese groups stick to the rules, Ericsson points out. China is criticised for its investments, but competition with the established mining groups is a healthy development, he argues.

Global mining is certainly moving south of the equator, but generally not into Africa.

In contrast, the production of minerals from South America and Australia has increasing importance, mainly because of the significant amounts of iron ore that these regions produce.

At the same time Africa's contribution to global mining production is on the decline. In 1984 Africa produced 20% of the world's metals, but its contribution is now 11%-odd, says Ericsson.

In Africa, South Africa's importance relative to the rest of the continent has increased since 2007. South African mines add six times more value than its closest competitor, Botswana, does.

The lion's share

For two decades Ericsson has been studying the structure of the global mining industry and says there is too much concentration in the hands of a few mining giants.

Ericsson issues a particular warning against plans by BHP Billiton and Rio Tinto to combine their iron-ore interests in Australia. This, he says, would create too large and influential a company.

This year will definitely see an increase in mergers and acquisitions, resulting in a further amassing of interests, he predicts.

Consolidation is historically associated with rising metal prices, which are anticipated this year.

Globally there are about 4 100 mining companies, three-quarters of which are juniors that mostly are not producing yet. Then there are about 1 000 small to medium producers and 149 major mining groups.

The small group of mining giants controls 83% of all mining.

In terms of metals, platinum is the world's most concentrated resource, largely because Anglo Platinum and Impala Platinum dominate in this sector.

- Fin24.com

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