Home News China, S.Africa seal new oil, rail deals

China, S.Africa seal new oil, rail deals

Published on 26/03/2013

South Africa signed a raft of agreements with China on Tuesday, including on the construction of a world-class oil refinery and upgrading the country's rail and port networks.

The deals were sealed at the end of talks between President Jacob Zuma and his counterpart Xi Jinping.

Under the oil agreement, China Petroleum and Chemical Corporation (Sinopec) and South Africa’s national oil company PetroSA will build a state-of-the-art crude refinery in a coastal industrial zone near Port Elizabeth.

China is also eyeing oil and gas exploration in South Africa and nearby countries, plus downstream opportunities such as constructing storage and logistics infrastructure.

South Africa’s eastern neighbour Mozambique has become the latest investment destination following the recent discoveries of vast quantities of natural gas and coal reserves.

Angola, Africa’s second largest oil producer is within the vicinity of South Africa.

China Development Bank will fund the revamp of South Africa’s freight rail company Transnet, but details were not revealed. Transnet last year unveiled a 300 billion rand ($32.4 billion) investment plan.

Transnet group chief executive Brian Molefe hailed the agreement with China as a “historic agreement between two state-owned entities within BRICS” which goes to show the “opportunities inherent” in such diplomatic ties, reported SAPA news agency.

Zuma has earlier lauded China’s economic success as an inspiration for Africa’s biggest economy, but urged more equitable trade ties.

“We view China’s success as a source of hope and inspiration as we engage with the task of finding our own solutions for bringing about a better future,” Zuma said after talks with Xi.

“The rise of China therefore has lessons for us all as we seek to emulate your example.”

Xi, who is making a three-nation stop on the continent, said China valued the relationships it has established with trading partners and will work to preserve them.

“We each see the other side as priority… and see the other side as an opportunity for our own development,” he said.

“We are committed to strengthening our political trust, intensify economical cooperation, expand people to people exchanges and elevate the level of our cooperation to the benefit of people in both countries.”

China, the world’s second-largest economy, is South Africa’s biggest trading partner and a “significant investor”, Zuma said.

Total trade between China and South Africa totalled 201 billion rand ($21.7 billion) last year, he said, citing figures from South Africa’s revenue agency.

Exports from South Africa to China stood at 89 billion rand, while imports from China to South Africa totalled 112 billion rand.

A “more equitable balance of trade” was now being sought, Zuma said.

The two countries signed a array of agreements on trade and investment, education, infrastructural development and coastal management.

The leaders then headed for Durban to meet their counterparts at the summit of the BRICS grouping of Brazil, Russia, India, China and South Africa which opens later Tuesday.

Xi expressed hope the talks between the five major emerging economies “will generate positive results and help elevate the cooperation between BRICS countries and African countries to a higher level.”

From South Africa, Xi will travel to the Republic of Congo on the next leg of his first presidential foreign trip which began in Russia.

Xi’s tour is being seen as a sign that China’s drive for deeper economic ties with Africa will continue during his term.