China’s Huaxin Cement Digs Further Into Zambian Market

Chinese cement producer Huaxin is set to expand its presence in southern Africa, purchasing a number of cement factories in Zambia and Malawi for US$160 million. 

As part of the deal the company’s investment arm, Unit Huaxin Hainan Investment, is set to buy a 75% stake in the Lafarge Zambia building materials company for US$112.5 million, taking over from current French owners Financière Lafarge. 

Huaxin will also make compulsory cash offers to public stakeholders in order to buy up the remaining 25 per cent equity. 

The deal, which is still subject to approval by authorities, continues the growing trend of Chinese investment in Zambia, which some criticise as putting the country in the pocket of Beijing.

According to official figures, Beijing currently owns 44% of Zambia’s foreign debts and Chinese nationals operate over 280 companies across the country. 

These companies have often been accused of mistreating or even abusing their Zambian workers. In May 2020, Lusaka Mayor Miles Sampa uncovered a Chinese-owned cement factory, where Zambian workers had been forcibly held for two months because of fears about the coronavirus pandemic. 

One Zambian employee at the factory told reporters: “We were asked by our (Chinese) bosses to stay and work from here until the coronavirus is over because they fear we might contract it from the community and bring it to our workplace”. 

China’s grip over Zambia has strengthened rapidly during the Patriotic Front’s time in office. The Asian superpower has gotten African nations hooked on its generous, non-concessional loans which help to support infrastructure development. In 2011, just 23% of Zambia’s total debt was made up of these loans - by 2019 this had climbed to 77%. 

As Zambia’s debt situation gets progressively worse, China’s monopoly over the country grows. In November 2020, Zambia became the only nation in Africa to default on its debts during the pandemic - an inevitability which experts put down to longterm unsustainable borrowing. Shortly after, the government announced that it would be contracting a further $1.5 billion in debt in order to purchase the ailing Mopani Copper Mines. Officials at the Ministry of Finance said the mine was being purchased as collateral for Chinese debts.

“It’s possible the mine operation may be used as collateral if we don’t get an investment partner soon,” one official told Bloomberg news.