Business Daily (Nairobi)
Dominique Patton
25 March 2008
South Africa's Standard Bank is launching a $1bn fund with China's Industrial and Commercial Bank (ICBC) to invest in mining and other natural resources.
The fund will target projects in junior mining, energy and metals in Africa, China and other parts of the world, said the banks. ICBC, the biggest lender in China, recently bought a 20 per cent stake in Standard Bank and the new fund is a first step in a long-term collaboration between the two banks, said a statement.
Dirk Kotze, general manager of The Beijing Axis, a consultancy working with Chinese companies investing in Africa, said: "It's a good link-up between the money and the people who need resources, and the people who know the country."
China is seeking greater access to energy and metals overseas to fuel its booming manufacturing economy and supply raw materials for the rapid industrialization of its rural areas.
It has recently agreed a US$5 billion loan to the Democratic Republic of Congo in return for access to the country's copper and cobalt mines. ICBC's new partnership with Standard Bank will allow it to seek more 'private' deals, said Mr Kotze, rather than following Chinese companies into Africa.
He added that the tie-up between institutions from China and South Africa was "long overdue" because both countries have significant interest in the African continent's resources. "Those interests were converging. There would have been inefficiencies if they hadn't collaborated at some time," he told Business Daily.
ICBC and Standard Bank started talks on the fund last year. Under the final agreement, each will invest US$200 million with the remainder made up of funds from third parties.
It is not known whether the fund will support any mining projects in Kenya. A Chinese company already has a presence in Kenya's titanium mine after the Jinchuan Group bought into Canadian exploration company Tiomin. Typically "the Chinese have a propensity to go for big ticket deposits", said Mr Kotze.
The ICBC-Standard Bank fund has a return target of 20 per cent. "The money will go where there is money to be made and that's in resources for the moment," added Mr Kotze.
Standard Bank and ICBC also announced the start of cooperation on trade financing, investment funds, commodities and global markets.
Speaking at the launch of the fund, ICBC chairman Jiang Jianqing said the cooperation "will not only create greater value for our shareholders, but will help further future developments in China-Africa trade relations".
A committee has been set up to manage the resources fund, co-chaired by ICBC president Yang Kaisheng and Standard Bank chief executive Jacko Maree.
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