Mmegi/The Reporter (Gaborone)
NEWS
July 11, 2006
Posted to the web July 11, 2006

By Joel Konopo

A University of Botswana macroeconomist, Gaotlhobogwe Motlaleng has advised government to capitalise on China's insatiable appetite for raw materials. "China is a giant. It is a prime market. Trade is good where there is demand for commodities," said Motlaleng.

Responding to a suggestion by a Sino-Africa trade expert, Michael Power that Africa should take advantage of Chinese demand for African resources, Motlaleng agreed that Botswana should open its market to the Asian world. "All we want is trade, growth and opportunities for employment."

Last week, Power implored Africa to open its market and allow for mutually beneficial trade. Motlaleng said China and India's combined population of over 2.5 billion provides a significant market opportunity for Botswana. He said Botswana, a mining country, could benefit from China's strong demand for metals and diamonds. Power agreed with Motlaleng. "Chinese demand for steel is growing by 400 percent," Power had said. Perhaps to demonstrate Chinese insatiable appetite for base metals, Power said in 1992, China was the world's 5th consumer of steel. "By 2002, China was the largest."

Botswana, the world's largest producer of diamonds by value, produces an impressive 31.9 million carats of diamonds per year. Power said Botswana could establish a relationship between the two countries. The relocation of a diamond - trading factory (DTC) from London to Gaborone will facilitate the relationship. Motlaleng had further noted that sovereign countries like Botswana and China are driven by self-interest and that insinuations that China has a questionable democratic record should not be a priority to Botswana.

However, the UB lecturer expressed fears that because of this trade, China might bring more of its cheap products into Botswana, flooding the local market. "The problem I have is when they bring their cheap products here," he said.

Global demand for minerals, especially copper increased in the past six months, hitting a record high of US$3.554 a ton. As a result, global market suppliers are tight driven by the demand from China, which is expected to consume about 22 percent of the world's copper this year. With the outlook relatively rosy, copper mining companies appear set to begin enjoying strong cash-flow underpinning and improving their production capacity to take advantage of China's increasing appetite for copper. However, BCL - Botswana's sole copper mining company - will not increase production to benefit from a seemingly insatiable appetite for copper among buyers from China. "Increasing capacity is very expensive and it would require huge capital outlay to build another smelter," BCL general manager Montwedi Mphathi was quoted as saying.