TOKYO (Reuters) - A Japanese government drive to secure access to resources in Africa has sputtered as some companies shy away from investing due to slumping commodity prices and worries over political stability, helping China as it races to import raw materials from the continent.
Around two years ago, Japan said it would provide about $2 billion mainly to back African commodity projects by its firms as part of a move to secure supplies of materials such as coking coal and copper it needs to churn out steel and electronic components.
But worries over the stability of the investment environment in some African nations, along with falling commodity prices, have sapped momentum from that push, Japanese firms said at a mining conference on Thursday and Friday.
A lack of infrastructure and concerns over resource nationalism were also cited as reasons.
“To invest in mine development, it is necessary to see an improvement in Africa’s investment environment so it is politically, sociologically and economically stable,” Shigeru Oi, president of JX Nippon Mining & Metals Corp, Japan’s top copper refiner, said in a speech.
“If those things improve, Africa, which is rich in promising mineral resources, will certainly become an attractive investment target.”
Resource-poor Japan wants to diversify its supplies of key commodities. For example, around 70 percent of its copper supply currently comes from South America.
Takahiro Hagiwara, a director in the Japanese government’s Agency for Natural Resources and Energy, said the $2 billion set aside to back investment in Africa had been spent more slowly than expected, but that declining commodity prices were the main reason for this.
He added that Japanese and African ministers would meet on Saturday to discuss ways to promote greater investment.
“Chinese investment has actually increased a bit as they are trying to take advantage of opportunities falling commodity prices may provide,” said Christophe Akagha Mba, mining minister in Gabon, a nation on the west coast of central Africa.
“But the Japanese are still at the same stage. They have not even started (significant investment) yet.”
African countries such as Libya, Mali, Burkina Faso and Burundi have been hit by conflict in recent years.
But African officials at the event said that many nations in Africa were democratic, with robust legal protection for foreign investors.
Japanese overall investment in Africa in 2014 was almost $1.5 billion, according to the Japan External Trade Organization, which does not provide a breakdown of sectors. That compares with $2 billion for a single investment by China in oil-rich Equatorial Guinea in April.