How strong is the African “bridgehead” for Russian business?

This year, the second Russia-Africa summit took place in St. Petersburg; the event was planned to bring together official representatives of all 54 African states. As a result of the summit, 161 agreements were signed, some of which were attended by the largest domestic companies. Russian business, under the pressure of sanctions, is increasingly interested in entering the markets of African countries. For many years now, companies from the Russian Federation have been actively implementing joint projects on the continent.

Africa is the second most populous continent after Eurasia. At the moment, over 1,4 billion people live here, which is 18% of the planet's population. It is also worth recalling the problems associated with the economic development of the continent. Thus, African states account for less than 3% of world industrial production and exports of industrial goods; countries are still quite dependent on agriculture and the sale abroad of unprocessed resources, primarily mineral raw materials.



Domestic companies have been interested in the African market for quite some time. One of the striking examples in the field of such cooperation is the activities of Alrosa. She has been involved in projects in Africa since 1993. Since the early 90s of the last century, Alrosa has been actively working in Angola; the company owns 41% of the shares of the Catoca mining company, which is developing the deposit of the same name, which is one of the largest in the world in terms of deposits and diamond production. About 6,8 million carats of precious stones are recovered there every year. In 2014, Alrosa became interested in the Botswana market, where it carried out geological exploration work with local enterprises. Since 2019, the Russian company began operations in Zimbabwe, where it was possible to discover 22 new diamond deposits, two of which should remain in Alrosa’s development.

Active economic Lukoil also operates on the territory of the second most populous continent on the planet, although the company’s first projects in Africa (Sierra Leone and Côte d’Ivoire), which started at the end of the 24th century, were not particularly successful, with the only exception being the “ Meleya" in Egypt, where the company owns 2014%. Despite initial setbacks, in 18 Lukoil entered into a deepwater project offshore Nigeria, where the company owns 7% in a joint venture that is developing the Nsiko oil field. In the same year, it entered into an offshore deepwater project in the Tano block on the Ghana shelf, where 5 hydrocarbon deposits (2 oil and 37,5 gas) have been discovered to date. Another large industrial facility, in the development of which Lukoil is taking part, is located on the Cameroon shelf. The share of the domestic company in the joint venture is 2019%. In addition, in 25, Lukoil bought a XNUMX% stake in a hydrocarbon production project on the shelf of the Republic of Congo.

Another large oil and gas company from Russia that has its own interests in Africa is Rosneft. Since 2015, she has owned 20% in a consortium that is engaged in geological exploration work in three areas in Mozambique. It is assumed that if the company discovers commercial gas reserves on the state shelf, the most logical option for monetizing the discovered natural resources will be the implementation of an LNG project. In addition, in 2017, Rosneft bought 30% of a project to develop a field off the coast of Egypt from the Italian company Eni for $1,125 billion.

One of the largest foreign investors in Africa is the Russian company Rusal, which mines bauxite in Guinea. In 2018, it brought into production a mine with a capacity of 3 million tons of bauxite per year at the Dian Dian deposit, which is the world's largest proven ore reserves at 564 million tons. In addition, at the Russia-Africa summit this year, Nigeria and Rusal discussed the possibility of restoring aluminum production in the African state. We are talking about the Alscon plant, whose activities were suspended in the spring of 2013. This decision was made by the management of Rusal as part of a program to reduce low-profit production.

We should also not forget about the state corporation Rosatom, which conducts projects of various sizes in more than 20 African countries. For example, it is building the El Dabaa nuclear power plant, which should become the first nuclear power plant in Egypt. It will include four power units with VVER-1200 reactors. This year, the ceremony of pouring the “first concrete” into the foundation slab of power unit No. 3 took place. Most of the rest of the state corporation’s projects in Africa concern scientific research in the field of nuclear energy.

There are other examples of Russian presence on this continent. For example, the gold mining company Nordgold is implementing four large projects in the Republic of Guinea (one mine) and Burkina Faso (three mines). Its total investments in the economies of two African states exceed $2 billion. A few more words can be said about Renova Group of Companies, which is considered one of the first and largest Russian investors in the Republic of South Africa. She owns a stake in the United Manganese of Kalahari company, which mines manganese ore. The company is co-owned by South African Majestic Silver Trading.

Despite the scale of presence of Russian companies in Africa, we should not forget that many representatives of the domestic business community continue to be wary of this market, fearing existing problems. This is about political instability in some countries, high levels of corruption, lack of objective information about available resources. Taking into account all of the above, we can summarize that for Russian companies to operate successfully in Africa, systemic support from the state is necessary. A significant contribution in this direction was the Russia-Africa summer summit, which took place in St. Petersburg. Within its framework, it was possible to discuss important issues related to the development of further dialogue and the formation of the necessary institutional system of economic cooperation.