Heady mix

Mozambique is on track for exciting future as it seeks to exploit its mineral wealth with Chinese collaboration

With its Portuguese colonial architecture and pleasant avenues lined with brightly-colored acacia and jacaranda trees swaying in the Indian Ocean breeze, Maputo has almost a sleepy feel to it.

Yet it is the capital of one of the most talked-about countries in sub-Saharan Africa.

Mozambique has had high single-figure growth for most of the last decade, fueled by a construction boom, credit expansion and exploitation of coal resources. This was before the recent discovery off its northern coast of one of the world's largest known gas reserves, which will be ready for commercial exploitation in five years.

Although growing from a low base - Mozambique remains one of the poorest and most unequal countries in the world - some talk headily of it being the next Dubai within 20 years.

It is also a country with which China has had a historic association: Admiral Zheng He went there on his first voyage in the early 15th century. And when the country gained independence from Portugal in 1975, there were some 30,000 Chinese in the country's second city Beira alone with numbers unknown elsewhere.

Most of these overseas Chinese fled to Brazil and Portugal when the country became embroiled in a devastating 15-year civil war two years after independence.

Over the past decade or more a new wave of Chinese have entered the country, beginning with many China aid-funded factories in the textiles and shoe industries.

There is now a Chinese Chamber of Commerce in Maputo and local labor laws are even translated into Chinese.

It is estimated the Chinese have built a third of all new roads in the country as well as Maputo International Airport, major water schemes, the imposing Ministry of Foreign Affairs building and the national football stadium.

The latest Chinese involvement is in resources, which could be the basis of the two countries' future economic relationship.

Last year China's state-owned and biggest oil producer, China National Petroleum Corporation, acquired an interest in Mozambique's new vast gas reserves.

It paid Italian oil firm Eni $4.21 billion for a 20-percent stake in its offshore project - one of China's biggest resources deals of recent times.

This followed on from China securing a major interest in Mozambique's coal production in 2010. Wuhan Iron and Steel Corporation bought an 8 percent stake in Australian coal mining concern Riversdale Mining to develop a coking coal project in the country's Tete province.

The $800 million deal will provide China with much needed coking coal imports.

Over morning tea at the Chinese embassy just out of the city center and off the coastal road, Wang Lipei, economic counselor at embassy, says this is one of the directions in which China's involvement with Mozambique is going.

"The significance of this (the recent resources deals) is that for decades and decades Western companies have bought the rights for mining projects but have never started to explore. With CNPC coming here, they are really going to break ground," he says.

The counselor, a youthful 50-year-old, says the Mozambique economy has actually been held back by foreign companies just sitting on their resource assets.

"They have waited for them to appreciate so they can make a profit that would be good for their international stock price. Once the resources are developed, Mozambique will benefit from greater tax revenues, more jobs and better infrastructure. It will transform the country," he says.

China's trade with Mozambique increased from around $100 million in 2003 to $1.4 billion last year. China is also the sixth-biggest foreign investor in the country after the United States, Brazil, India, South Africa and Portugal.

There has also been a lot of Chinese finance flowing into Mozambique. The country received a $2.3 billion loan from China Exim Bank as a result of former Chinese president Hu Jintao's visit to the country in 2007.

Former Mozambique prime minister Aires Ali secured $165 million of similar funding when he went to Beijing four years ago.

The current president, Armado Guebuza, also received funds on a state visit to China in 2011, some of which were for a distance learning initiative, which now enables children in rural areas to be taught by teachers based in Maputo.

One Chinese company that has played a major role in the country is Anhui Foreign Economic Construction Group, which has been in Mozambique since 1998.

It was the company selected from its province as part of the national "go out" strategy and given a $20 million loan to get on with it.

With the money it built what is now the Sogecoa Apartment Hotel (although the building has had multiple uses) in Avenue Vladimir Lenine in the center of Maputo.