Keeping up with the neighbours: Japan to invest billions in Africa to compete with China
Japan keen to invest in strategic minerals and rare earth metals in South Africa to catch up with rival China.
Posted: Wednesday , 09 Feb 2011
CAPE TOWN (Reuters) -
Japan is keen to invest "billions of dollars" in minerals and infrastructure in Africa, trying to catch up to regional rival China for influence on the continent, a Japanese trade official said on Tuesday.
Yoshikatsu Nakayama, vice minister of economy, trade and industry, said Japan was scouting for projects in which to invest, either via its state-owned oil and mining company JOGMEC or via joint ventures between local and Japanese companies.
China has spent billions of dollars on projects in Africa, trying to secure the resources it needs to fuel its quickly accelerating economy.
Analysts said the investment has given China an advantage in building trade in the emerging economies of Africa, leaving Japan behind for influence in the continent of one billion consumers whose purchasing power is steadily increasing.
"Whether through JOGMEC directly participating or through JOGMEC providing loans to Japanese companies, the figure would come to a few hundred million dollars per project," Nakayama told Reuters on the sidelines of a mining conference.
Japan was also looking to develop South Africa's rare earth metal resources but Nakayama said it would take a long time for projects to bear fruit.
The metals used for making high-tech products and auto parts were used by China as leverage in a political dispute with Tokyo last year, with Beijing restricting exports and alarming Japan's top manufacturing firms.
Nakayama said Japan wanted to move into Africa gradually, even though the country had already been asked by some African mineral hubs such as Zambia why it was not pushing into Africa as aggressively as China.
Japanese trading firms such as Mitsui & Co, Mitsubishi Corp and Itochu Corp have been in Africa for years.
Nakayama also said Japan was keen to develop Africa's infrastructure, including rail lines, power plants and other transport links, along with the mines.
He dismissed fears Japan might miss out on the commodities boom if it waited too long. "Once Japanese companies make a decision, they invest in the order of billions of dollars and buy an important stake in a minerals project," he said.
Japan is already participating in a uranium project in Namibia and manganese and platinum projects in South Africa.
(Editing by Jon Herskovitz and Keiron Henderson)