Indian, Singaporean Companies Agree to Develop Projects in West Africa's Gabon

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Researched by Industrial Info Resources (Sugar Land, Texas)--Two Indian companies and another from Singapore have signed agreements with the government of Gabon, in a move that is being seen as a part of the competition between India and China to secure favored African markets, supplies and resources.

The privately owned real estate developer M3M India Limited (Gurgaon, Haryana) has agreed to develop 5,000 low-cost housing units in Gabon during the next two years. M3M is also looking to develop a resort city near the capital city of Libreville, as well as the possible development of Gabon's Atlantic seafront. The total cost for all three projects is expected to be about $1.1 billion.

Another Indian company that has signed agreements in Gabon is the infrastructure construction company Ramky Infrastructure Limited (Hyderabad, Andhra Pradesh), which is set to construct 1,000 kilometers of sealed roads in Gabon over the next three years, at the cost of $1.5 billion. The project will be financed jointly by Ramky and the Gabon government.

Olam International Limited (SIN:032) (Singapore), an international commodities trader in agricultural raw materials and food products, and the Gabon government will jointly develop a palm-oil plantation covering an estimated 300,000 hectares, and a palm-oil refinery in the southeast of Gabon. With the possibility of a port development at Mayumba included, the value of the development is estimated at $1.8 billion.

Olam also will work with the Gabon government to develop a special economic zone, estimated to cost at least $100 million, at the western town of Nkok, some 27 kilometers to the east of Libreville. The economic zone is expected to draw in about $1 billion of investments and will include the capacity to process 1 million cubic meters of timber each year.

Gabon is the fifth-largest oil producer in the sub-Saharan region of Africa, but oil production has declined over the past decade from an estimated 340,000 barrels per day to just 229,000 barrels per day last year. With a declining oil production, Gabon is looking at diversification in its economy and the moves to develop the palm oil industry are in line with the country's ambition to become Africa's largest producer of edible palm oil.

In addition to oil production, Gabon is an exporter of iron, timber and manganese, which is used in steel production. The country has rich deposits of iron ore in the northeast region around the town of Makokou, and plans to exploit these reserves are expected to begin in 2012.

Gabon exports mainly to the United States (25.4% of all exports in 2008) and China (19.1% in 2008), with Japan (10.2%) and France (5.4%) being the largest of the remaining trading partners. As Gabon obtained independence from France in 1960, it is not surprising that the majority of imports, which mainly consist of machinery, foodstuffs, chemicals and construction equipment, comes from France.

Over the past decade, Chinese companies have increased their investments in African countries as they seek to secure raw material sources and gain infrastructure projects. Gabon, with an estimated 2 billion barrels of proven oil resources, more than 28 billion cubic meters of natural gas reserves, and significant iron ore reserves, is an attractive target.

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