China's Zero-Tariff Expansion Plays To Commodity Clients

BEIJING, Jun. 24 -- China's decision to add 33 countries to its list of those largely exempted from import tariffs includes many with commodities that the country is seeking, according to a Dow Jones Newswires review of a Ministry of Finance announcement.

The move extends China's race to secure natural resources for its massive industrialization needs, adding another sweetener to its suite of incentives alongside increasingly higher value-added goods to the exchange.

The ministry said Wednesday it's adding Ethiopia, Kenya, Liberia, the Democratic Republic of Congo, Burundi, Uganda, Zambia and Afghanistan to its existing list of 41 mostly developing economy nations.

China has significant commodity interests in the beneficiary nations.

The Democratic Republic of Congo, which exports copper concentrate and scrap aluminum to China, is also where Chinese infrastructure builders Sinohydro Corp. has a deal to build a hydropower dam.

China has had a deal since 2008 to build mining and civic infrastructure in the African country, in exchange for 10 million metric tons of copper concentrate.

The Export-Import Bank of China is funding the development of Congo's Katanga copper project, and Jiangxi Copper Co. (0358.HK) is looking for acquisition targets there.

In Zambia, China's largest nickel producer Jinchuan Group Co. has taken over the Munali nickel mine. Jiangxi has also said it is hunting for acquisitions in the country.

In Liberia, China is carrying out a $2.6 billion project to revitalize the Bong iron ore mine.

China Investment Corp., the country's sovereign wealth fund, is considering investing in a potassium carbonate development project in Ethiopia, Japan's Nikkei reported in May.

China relies on imports for 80% of its potassium carbonate, which is used in fertilizer.

Ethiopia exported 12,156 tons of rapeseed meal to China in the first five months of this year.

Kenya, which exports relatively small amounts of tin concentrate, refined lead, lead concentrate and scrap aluminum to China, is also where Jinchuan is prospecting for nickel mines.

In Afghanistan, Jiangxi Copper and China Metallurgical Group Corp. are working on a $4.39-billion bid to develop a large copper project in the Aynak field in Afghanistan.

The new policy is effective July 1, China's finance ministry said.