Identifier
Created
Classification
Origin
10LUSAKA103
2010-02-17 15:32:00
UNCLASSIFIED
Embassy Lusaka
Cable title:
CHINESE ENGAGEMENT IN ZAMBIA IS STRONG DESPITE
how-toVZCZCXRO5843 RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO DE RUEHLS #0103/01 0481532 ZNR UUUUU ZZH R 171532Z FEB 10 FM AMEMBASSY LUSAKA TO RUEHC/SECSTATE WASHDC 7671 INFO RUEHZO/AFRICAN UNION COLLECTIVE RUEHBJ/AMEMBASSY BEIJING 0141 RHMFISS/HQ USAFRICOM STUTTGART GE
UNCLAS SECTION 01 OF 02 LUSAKA 000103
SIPDIS
STATE FOR AF/RSA MAZEL, GRIESMER, AND BOWLES
E.O. 12958: N/A
TAGS: PREL EAID CN ZA
SUBJECT: CHINESE ENGAGEMENT IN ZAMBIA IS STRONG DESPITE
ITSELF
REF: STATE 10152
UNCLAS SECTION 01 OF 02 LUSAKA 000103
SIPDIS
STATE FOR AF/RSA MAZEL, GRIESMER, AND BOWLES
E.O. 12958: N/A
TAGS: PREL EAID CN ZA
SUBJECT: CHINESE ENGAGEMENT IN ZAMBIA IS STRONG DESPITE
ITSELF
REF: STATE 10152
1. (SBU) The following information is in response to Ref A
request for information regarding China's engagement with
Zambia and whether there are areas of collaboration between
the United States and China in the country.
CHINA'S ENGAGEMENT IN ZAMBIA
--------------
2. (SBU) China is a leading source of foreign direct
investment in Zambia. While data on Chinese investment in
Zambia are incomplete, Chinese firms have invested
substantial amounts in the country, primarily in the mining
sector. Zambia signed an agreement in July 2009 with
Zhonghui Mining Group, which committed to invest USD 3.5
billion in mining projects in the Copperbelt and Northwest
provinces. Chinese-controlled copper output should increase
as investments come on line, including at the Luanshya Copper
Mine, which China Nonferrous Metal Mining Co. (CNMC) acquired
in 2009 for USD 50 million after the mine's previous owners
put it in suspended care and maintenance status. Also in
2009, a Chinese company acquired Albidon Nickel Mine in
Mazabuka from its Australian owners. CNMC and another
smaller Chinese copper firm signed a deal in 2006 to invest
USD 220 million to build a 150,000-ton copper smelting plant,
which became operational in 2008. Chinese-owned firm CBMI
Construction was contracted by France's Lafarge to construct
a USD 120 million expansion of its cement plant in Lusaka,
which was commissioned in November 2008. The new plant
produces 2,000 tons (80,000 50-kilogram bags) per day.
3. (SBU) China is setting up a USD 900 million Multi-Facility
Economic Zone (MFEZ) in Chambishi, Copperbelt Province
underwritten by the Chinese business community and the
People's Republic of China. Zambia is the first African
country to have a Chinese MFEZ. The Chambishi Copper Smelter
(CCS),commissioned in October 2009 in the MFEZ, has a
capacity of 150,000 tons of concentrates annually. Chinese
developers plan to start construction on a 570 hectare MFEZ
near Lusaka in 2010. The USD 350 million project will create
an economic zone near the international airport to include
residential areas and industrial and commercial activities.
In early 2009, the Chinese Government signed agreements to
loan and grant Zambia a further USD 67 million as part of the
zone and other projects.
4. (SBU) In January 2010, China provided USD 39 million to
TAZARA, the dilapidated railway China built from Kapiri
Mposhi, in central Zambia, to Dar Es Salaam, Tanzania in the
1970s. The Zambian government reported that the capital
injection was an interest free loan and that the Chinese
government would also provide technical assistance to the
troubled railway to improve operations. China is also active
in road construction in Zambia and is engaged in "stadium
diplomacy" by funding and building a new soccer stadium in
the Copperbelt.
5. (SBU) There is plentiful criticism in Zambia of Chinese
investment regarding how the deals are conducted, the quality
of Chinese products, labor rights of workers in Chinese
entities, and the use of Chinese imported laborers rather
than locals. There are glaring examples of large government
procurements from China that were not competed per
procurement regulations. In the case of road projects, the
Chinese-built road from a border point with Zimbabwe, the
main artery for imports from South Africa, washed out just 18
months after construction. The Chinese owned Collum
Colleries mine has been shut down repeatedly due to worker
deaths but remains operational. Nevertheless, Chinese
presence in Zambia is solidified by their cut rate prices and
their willingness to do deals and to provide highly
concessional financing.
U.S.-CHINA COLLABORATION
--------------
6. (SBU) There is no U.S.-China collaboration in any sector
of the Zambian economy or in economic or social development
assistance here. When the Ambassador has suggested to his
Chinese counterpart the possibility of coordinating
assistance efforts either bilaterally or through multilateral
donor coordination mechanisms that already exist and function
well in Zambia, he has been politely rebuffed. Chinese
embassy officials insist that the PRC is not engaged in
economic and social development activities here but rather
focuses exclusively on its commercial relationship with
Zambia.
LUSAKA 00000103 002 OF 002
BOOTH
SIPDIS
STATE FOR AF/RSA MAZEL, GRIESMER, AND BOWLES
E.O. 12958: N/A
TAGS: PREL EAID CN ZA
SUBJECT: CHINESE ENGAGEMENT IN ZAMBIA IS STRONG DESPITE
ITSELF
REF: STATE 10152
1. (SBU) The following information is in response to Ref A
request for information regarding China's engagement with
Zambia and whether there are areas of collaboration between
the United States and China in the country.
CHINA'S ENGAGEMENT IN ZAMBIA
--------------
2. (SBU) China is a leading source of foreign direct
investment in Zambia. While data on Chinese investment in
Zambia are incomplete, Chinese firms have invested
substantial amounts in the country, primarily in the mining
sector. Zambia signed an agreement in July 2009 with
Zhonghui Mining Group, which committed to invest USD 3.5
billion in mining projects in the Copperbelt and Northwest
provinces. Chinese-controlled copper output should increase
as investments come on line, including at the Luanshya Copper
Mine, which China Nonferrous Metal Mining Co. (CNMC) acquired
in 2009 for USD 50 million after the mine's previous owners
put it in suspended care and maintenance status. Also in
2009, a Chinese company acquired Albidon Nickel Mine in
Mazabuka from its Australian owners. CNMC and another
smaller Chinese copper firm signed a deal in 2006 to invest
USD 220 million to build a 150,000-ton copper smelting plant,
which became operational in 2008. Chinese-owned firm CBMI
Construction was contracted by France's Lafarge to construct
a USD 120 million expansion of its cement plant in Lusaka,
which was commissioned in November 2008. The new plant
produces 2,000 tons (80,000 50-kilogram bags) per day.
3. (SBU) China is setting up a USD 900 million Multi-Facility
Economic Zone (MFEZ) in Chambishi, Copperbelt Province
underwritten by the Chinese business community and the
People's Republic of China. Zambia is the first African
country to have a Chinese MFEZ. The Chambishi Copper Smelter
(CCS),commissioned in October 2009 in the MFEZ, has a
capacity of 150,000 tons of concentrates annually. Chinese
developers plan to start construction on a 570 hectare MFEZ
near Lusaka in 2010. The USD 350 million project will create
an economic zone near the international airport to include
residential areas and industrial and commercial activities.
In early 2009, the Chinese Government signed agreements to
loan and grant Zambia a further USD 67 million as part of the
zone and other projects.
4. (SBU) In January 2010, China provided USD 39 million to
TAZARA, the dilapidated railway China built from Kapiri
Mposhi, in central Zambia, to Dar Es Salaam, Tanzania in the
1970s. The Zambian government reported that the capital
injection was an interest free loan and that the Chinese
government would also provide technical assistance to the
troubled railway to improve operations. China is also active
in road construction in Zambia and is engaged in "stadium
diplomacy" by funding and building a new soccer stadium in
the Copperbelt.
5. (SBU) There is plentiful criticism in Zambia of Chinese
investment regarding how the deals are conducted, the quality
of Chinese products, labor rights of workers in Chinese
entities, and the use of Chinese imported laborers rather
than locals. There are glaring examples of large government
procurements from China that were not competed per
procurement regulations. In the case of road projects, the
Chinese-built road from a border point with Zimbabwe, the
main artery for imports from South Africa, washed out just 18
months after construction. The Chinese owned Collum
Colleries mine has been shut down repeatedly due to worker
deaths but remains operational. Nevertheless, Chinese
presence in Zambia is solidified by their cut rate prices and
their willingness to do deals and to provide highly
concessional financing.
U.S.-CHINA COLLABORATION
--------------
6. (SBU) There is no U.S.-China collaboration in any sector
of the Zambian economy or in economic or social development
assistance here. When the Ambassador has suggested to his
Chinese counterpart the possibility of coordinating
assistance efforts either bilaterally or through multilateral
donor coordination mechanisms that already exist and function
well in Zambia, he has been politely rebuffed. Chinese
embassy officials insist that the PRC is not engaged in
economic and social development activities here but rather
focuses exclusively on its commercial relationship with
Zambia.
LUSAKA 00000103 002 OF 002
BOOTH