Africa: the race to extract natural resources

Article

Africa is a big part of the future of natural resource exploration and production. Right now, Africa produces only about 12% of the world’s oil output. By 2012, that could be 30%. No wonder, then, it has become such a competitive battleground for the oil companies.

Oil

In the spring, Delhi hosted the first Indian-African summit. Trade between India and Africa tops $25 billion per year. Nigeria, for example, accounts for 10% of India’s crude oil imports. But China’s trade with Africa is a lot more – $55 billion annually. The reason for this boom in trade? A hunger for the natural resources of Africa.

The recent discovery of oil sands in the Congo by Eni (BIT:ENI), the big Italian oil group, lends more credence to the idea of Africa as the future of global oil supply. Eni potentially doubled its oil reserves with this one African find. And in a recent auction, India’s state oil company bid $321 million for an Angolan oil block. A Chinese oil giant bid $725 million.

Uranium

It’s not just about oil, either. Africa holds tremendous amounts of natural gas, minerals, and natural resources of all kinds. Much of it is in places where it’s easy to do business. But there is often a fragile social fabric, which seems ever on the brink of a civil war or a coup or worse.

In Niger, for example, you will find some of the world’s largest deposits of uranium. Niger plans to double its output over the next several years. But the uranium deposits lie in the ancestral home of the nomadic Tuareg. The Blue Men of the Desert return to old ceremonial grounds to find red flags marking uranium deposits. The result is predictable – battles between the Niger army and Tuareg fighters, and bloodshed.

The race is on to extract the resources of Africa. The stampede of countries is getting louder. And yet, the people starve.

Advertisements
This entry was posted in Africa, Business, China, Development, Economics, Energy, Oil, War & security and tagged . Bookmark the permalink.

3 Responses to Africa: the race to extract natural resources

  1. the Grit says:

    Hi,

    Well, the demands of our rapidly increasing population will insure that Africa’s resources are exploited. There’s not really anything anyone can do about that, as even a drastic global effort to lower birth rates will take far too long. Thus, I would think, the world community should concentrate their efforts (like that dream is really going to happen) on giving the African population some form of democratic rule, so they have a chance to use the profit from selling their natural resources to provide for their future. I would propose that the US should lead an effort to depose all of the totalitarian governments in the region, but, sadly, we’re kind of busy at the moment. Still, calling the UN with a request to do the same would be an obvious exercise in futility. That leaves the EU to clean things up which, considering that most of Africa’s problems are the result of European Colonialism, seems fair and just. Get to it.

    the Grit

  2. matt says:

    Oh the EU is so guilt ridden over its horrid past that it dare not touch the place now. One exception, Sierra Leone; awful 10 year war stopped in 3 weeks by UK army. I really wish Brown would divert troops from Iraq and send them into Zimbabwe (for example) to support the drive for democracy but this won’t happen.

    Yes, Africans need control over their resources so they can make decisions on investment in infrastructure that will counter some of the problems they have. Irrigation systems are desperately needed for example.

    Trouble with Africa is that their leaders are always temped by the lowest common denominator; a foreign govt/business offering bribes for access to resources. Every other govt/business then feels they have to follow suit. It’s a spiral that only a few countries are showing the way out of; Rwanda being a good example.

  3. the Grit says:

    Hi matt,

    Well it’s comforting to know that African leaders aren’t superior to ours.

    the Grit

Comments are closed.