Johannesburg — PRESIDENT Vladimir Putin's recent two-day state visit to SA indicates Russia's eagerness to move into Africa's commercial space. The move indicates Moscow's new commercial emphasis towards Africa to counter the increasing presence of China and India on the continent.

SA looks set to act as Russia's springboard into the rest of Africa.

Putin has indicated his country's intent to expand its business footprint. With the 1990s occupied with domestic social and political unrest, Russia is moving abroad in southeast Asia, Latin America, and now Africa.

Despite Moscow's previous support of the African National Congress, relations between Russia and SA have been low key since 1994. This is reflected in trade. SA's imports from Russia between 2003 and 2004 grew by 30% to only $9m. From January to September last year this more than doubled to $18,2m. Exports to Russia for the same period measured $106,5m.

At present, SA's exports comprise fresh fruit, vehicle engines, machines and mechanical appliances, and flat-rolled products or iron, while the major import from Russia, accounting for more than 65% of South African imports, is made up of the nickel group of minerals.

During Putin's visit, a number of agreements were signed. Future projects will receive facilitation from an accord between SA's Industrial Development Corporation and Russia's state owned Vnesheconombank (the Bank for Foreign Economic Affairs) -- which is aimed at growing service trade and economic and technical co-operation between the two countries via increased project finance deals in the infrastructure, energy and mining sectors.

Agreements discussed and reach during Putin's visit include:

Metals Mining: A $1bn investment for a manganese production plant in Eastern Cape's Coega Industrial Development Zone has been negotiated involving Russian metals conglomerate Renova, which holds a 49% share in United Manganese of Kalahari (UMK). UMK is reported to hold deposits amounting to several hundred million tons.

Additional agreements surrounding the deal include one with Transnet to transport ore to Coega from the UMK mine in Kuruman and the construction of a ferroalloys smelter at Coega. A memorandum of understanding was also signed with Eskom to supply energy to the manganese mine and the ferroalloys smelter.

Renova chairman Viktor Vekselberg said that Sual Holdings, owned by Renova, and Rusal, were interested in the aluminium smelter project at Coega -- a potential $2,7bn injection into SA. However, the investment will depend on negotiations between Eskom and the Canadian Alcan, which holds first rights on the project and which is expected to make a final decision on the project by the end of September.

Diamond Mining: One of the key agreements to emerge from this new partnership between SA and Russia is a joint co-operation agreement between state-owned Alrosa and De Beers. Collectively the two companies produce 75% of diamonds globally, with the latter accounting for 40% of diamond production last year. The memorandum of understanding establishes links to examine opportunities for carrying out joint diamond prospecting and exploration activities in Russia and, in due course, other regions of the world, including Africa.

A deal was signed with Russia to source enriched uranium supplies for the Koeberg nuclear power plant. In accordance with this, Russia is to provide nuclear fuel to SA, up until 2010. Moscow has also said that it may increase uranium supplies in the future for a proposed Johannesburg plant if this is developed.

Automotive: Russia's potential investments also include the vehicle sector. The choice of taxis available in SA will increase with the possibility of a new Russian manufacturing company establishing facilities in the country. The move would be strategic as government's Taxi Recapitalisation Programme picks up speed.

Nedbank signed a co-operation agreement with Vnesheconombank. In terms of the agreement, Nedbank is the preferred bank and commercial partner of Vnesheconombank with the scope of the co-operation agreement covering trade finance facilitation and funding opportunities between Russian and South African companies.

On the media front, Russia's Promsvyazkapital is reportedly looking to sell its interests to Naspers. The South African group is apparently looking at buying interests including Promsvyazkapital's Argumenty i Fakty and Trud newspapers for between $400m and $500m. The move would tie in with Naspers' expansion into emerging markets.

Putin's trip to SA has illustrated Russia's want and need to move into Africa's commercial space. As was evident by the more than 100 business leaders accompanying him, Africa is destined to increase in priority in Russia's commercial foreign policy. However, as the Asian driver economies of China and India continue to expand their business interests on the continent, Russia is playing catch-up.