Japan to increase support for Africa’s mining sector

Japan’s government is reportedly set to increase financial support for Japanese companies investing in Africa’s mines and minerals sector. According to the country’s economy, trade and industry minister Yoichi Miyazawa, Japan will ‘take our relationships with African countries to a new stage,’ by stepping up bilateral meetings with nations in the region to bring more mining projects forward, Reuters reported early June.
The minister’s comments came after the ministry of economy, trade and industry (METI) hosted the second Japan-Africa ministerial meeting for resources development in Tokyo. METI said Japan aims to ‘expand opportunities to bring about a mid-to-long term stable supply of mineral resources from Africa.’
‘Africa is a continent with high-resource potential,’ a METI statement said. ‘However, it also faces many challenges in the investment environment, regional situations, and other business elements, which involve difficulties that the private sector is facing alone in developing business activities on the continent.’
The ministerial meeting coincided with a Japan-Africa mining and resources business seminar, which METI also hosted in cooperation with the Japan Oil, Gas and Metals National Corporation (Jogmec).
African nations represented at the seminar included the Democratic Republic of the Congo, South Africa, Botswana, Ethiopia, Namibia, Malawi, Tanzania and Zimbabwe. Initiatives discussed included ‘strengthening cooperation in the African resources sector’ by supporting further investment of Japanese firms working in the region, Jogmec said.
Jogmec offers equity capital to Japanese companies as part of the funds that they need for oil and natural gas exploration, asset acquisitions, and natural gas liquefaction projects – the physical conversion of a gas into a liquid state (condensation).
Jogmec’s activities in Africa are supported by a geological remote satellite sensing centre in Botswana, which was set up in 2008 in cooperation with the country’s government. More than 300 geologists from 12 countries have taken part in joint satellite image analyses and field surveys coordinated by the centre, which Jogmec said ‘aims to transfer the remote sensing technique to geologists from Southern African Development Community member states’ and identify prospect areas to form joint venture projects.
A survey conducted towards the end of 2014 by the Japan External Trade Organization (Jetro) indicated that 69 percent of respondents from Japanese-affiliated firms in 24 African countries intended to expand business operations in the next one to two years.
According to the survey, 54.4 percent of firms expected their operating profits to result in a surplus by the end of 2014. ‘Looking at the results by industry, the rate of the manufacturing (62.2 percent) exceeded that of the non-manufacturing (50.9 percent),’ the survey said. ‘By country, respondents in South Africa expressed high expectations of a surplus (66.7 percent).’
Also last year, Japan’s Sumitomo Corporation announced the establishment of the Sumitomo Corporation of Africa in South Africa and a liaison representative office in Mozambique, as part of the corporation’s ‘overall strategy to drive further business growth in the sub-Saharan region.’
Sumitomo said sub-Saharan Africa was a ‘designated company-wide growth region… with abundant natural resources, a massive need for infrastructure development, a nominal gross domestic product that grew approximately five-fold between 1980-2012, and a population that is projected to more than double to approximately two billion by 2050.’
The IMF’s Regional Economic Outlook for sub-Saharan Africa, published in 2014, said economic activity in the region continued to be underpinned by large investments in infrastructure, mining and maturing investments. The report said weaker commodity prices and slower growth in emerging markets may reduce net inflows of foreign direct investment, but overall growth across sub-Saharan Africa ‘should remain in the top 30 percent in the world.’

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