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Uganda embraces Turkish firm as it severs railway deal with Chinese firm, CHEC

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East African country, Uganda has ended its deal with Chinese firm China Harbour and Engineering Company Ltd (CHEC) to build a railway to the Kenyan border.

A senior government official made the revelation and hinted that the country is now considering a deal with a Turkish company.

Uganda 2015 signed an engineering, procurement, and construction contract with CHEC to develop the Standard Gauge Railway (SGR) project.

The 273-kilometer railway line, estimated to cost $2.2 billion,  which will use the international standard rather than a narrower gauge sometimes used in the region.

The line is planned to link the capital Kampala and Uganda’s border with Kenya, where it is planned to link up with Kenya’s own standard gauge rail that runs to the Indian Ocean seaport of Mombasa.

According to a senior official in the ministry of works and transport project, the country is however said to be frustrated with China’s unwillingness to provide funding for the project and is now courting Turkey’s Yapi Merkezi to take up the job.

“One of the obligations under the contract with the Chinese was that they were supposed to help Uganda source financing which has really not come true,” the official said on condition of anonymity.

The source revealed that Uganda in December wrote to the Chinese firm of its intentions to terminate the deal and the Chinese had so far not indicated any objection to the decision. Officials of CHEC were not immediately reachable for comment.

The source further revealed that the ministry had now focused on Turkey’s Yapi Merkezi for the completion of the rail project.

“So now the discussions are with Yapi Merkezi which has shown interest …there’s no contract with them yet, but there’s an MoU and things are moving fast.”

Commenting on the development, he told a news conference in Beijing, Chinese foreign ministry spokesperson Wang Wenbin said China and Uganda had in the past jointly cooperated in railways, hydropower stations, highways, oil and gas development, and infrastructure construction.

“China and Uganda are comprehensive cooperative partners, and practical cooperation between the two countries is at the forefront of China-Africa cooperation,” Wenbin said.

Musings From Abroad

UAE’s IRH to consider stake in Zambia’s Lubambe copper mine

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A division of the International Holding Company of Abu Dhabi, International Resources Holding (IRH), has announced that it plans to submit a proposal for a share in Zambia’s Lubambe Copper Mine.

 

The deal has opened up more potential to profit from Africa’s second-largest copper producer, according to IRH, which just acquired a 51% stake in Mopani Copper Mines in Zambia.

 

 

Even after Chinese firm JCHX Mining agreed to buy the stake, it was reported on March 22 quoting sources, indicating that IRH, a division of the most valuable company in Abu Dhabi, is interested in purchasing an 80% stake in Lubambe held by EMR Capital.

 

 

“IRH’s commitment (at Mopani), has opened doors for additional investment opportunities in Zambia, including an intention to bid for a stake in the Lubambe Copper Mine,” the company said.

 

Due to the company’s interest in Lubambe, which may be among Zambia’s biggest copper mines, a bidding battle between Shanghai-listed JCHX, a mine maintenance and contracting company, and itself may result.

 

Wealthy oil companies from Saudi Arabia and the United Arab Emirates have recently begun to follow China’s lead and engage in African businesses to acquire resources to diversify their economies and capitalize on the move to electric vehicles (EVs). In addition to making bids for mining projects, IRH stated that it was actively investigating a range of investment prospects.

 

“In the forthcoming years, our goal is to seek diversification opportunities beyond copper… (with) targeted investments in other pivotal energy transition minerals, such as cobalt, nickel, rare earth elements, manganese, graphite, and the 3T minerals – tin, tungsten, and tantalum,” it said.

 

The Zambian government currently plans to increase copper production from approximately 850,000 metric tonnes to 3 million metric tonnes annually by 2032.

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Musings From Abroad

China, Zambia’s major creditor, cooperating on debt rework— Official

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A spokesperson of Zambia’s foreign ministry has stated that one of its major creditors, China, has remained supportive of Zambia’s debt restructuring.

The diplomat did not, however, disclose whether China approved of a planned agreement the country in southern Africa made with foreign bondholders.

On Monday, Zambia and the bondholder group announced that they had come to a fresh understanding to restructure $3 billion in foreign notes. The proposal was given the go-ahead by Zambia’s formal creditors, the largest of which is China.

On Monday, Zambia announced that it has reached a deal with a group of private creditors on the restructuring of $3 billion of its foreign notes, which is a noteworthy achievement that brings the country closer to ending its lengthy debt restructuring.

Being the first nation in Africa to miss payments on its foreign debt during the Covid-19 outbreak, they have expressed a strong desire for the debt to be restructured. Unfortunately, the protracted delays in the process have strained the local financial systems, impeded desperately needed investments, and delayed economic progress.

Zambia defaulted more than three years ago and its debt rework process has hit many obstacles, including in November when the official creditors rejected a previous bond deal because it did not offer comparable debt relief to theirs.

“China, as co-chair of the Zambian Debt Committee, has made concerted efforts with all parties concerned to promote significant progress in the disposal of Zambia’s debt,” Lin Jian, a spokesperson for China’s Ministry of Foreign Affairs, said in a regular press conference.

“China will also continue to coordinate and cooperate with all parties concerned to steadily advance the work related to Zambia’s debt disposal,” he said when asked for China’s response to the latest bondholder deal.

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