By Business Week Reporter

Dar es Salaam. China’s economic foray into Africa in general and in Tanzania in particular started a long time ago. Starting with bilateral infrastructure and industrial cooperation in the 1970s’, China’s position as a strong economic partner with Tanzania has been slow but sure.

The Chinese ‘industrial revolution’ however, has tilted the nature of China’s interests in Tanzania and in Africa.

Chinese contractors bag the largest share of public works’ contracts from building roads to building universities, but the focus has gone more towards exploitation of natural resources to feed the ever growing demand of the global manufacturing hub.

And this started in the country with an announcement late last year of a plan by the Sichuan Hongda Group, a Chinese firm, to invest about $3 billion (Sh4.8 billion) to develop the Mchuchuma coal and Liganga iron ore projects in the south of the country.

And late last week, the global media was splashed with the news that the Barrick Gold Corp and the China National Gold Corp are in talks for a possible buyout of the African Barrick Gold, whose assets are entirely in Tanzania.

If successful the deal will cement the Chinese foothold in the Tanzanian mining industry.

The deal would also be the biggest Chinese deal in Africa since China Guangdong Nuclear Power Corp’s $3.37 billion takeover of uranium developer Kalahari Minerals and its partner, Extract Resources, in Namibia earlier this year, according to analysis by Reuters.

“A full bid for African Barrick could be worth £2.4 billion ($3.78 billion), if the London-listed gold miner were to fetch a 40 per cent premium on its closing price last Thursday,” Reuters say.

But what remains unclear is how the nature of the Chinese participation in the country will mean to the country efforts to benefit more from the resources.

“This is big news for Tanzania. As the fourth largest producer in Africa, gold accounts for over 40 per cent of the value of its goods exports.

With four mines in the north west, ABG is the country’s largest extractor of the metal,” said the Financial Times in an analysis at the weekend.

Experience somewhere in the continent points to a different picture, the Times says citing a bad reputation of Chinese mine owners in labour and community relations in countries like Zambia where fatal clashes occured between workers and personnel in the management.

“There are positive and negative examples of Chinese investment across Africa, and we need to be clear about what China needs. “It really depends on the individual company’s engagement with the local population. Many Chinese investors are beginning to learn this,” Markus Weimer, an Africa specialist at Chatham House is quoted by the Financial Times as saying.

Shefali Rai, a Tanzania expert from the Economist Intelligence Unit is also quoted as saying; “Like most other cases, the impact that an acquisition would have on working conditions at the mine would depend on how stringently the Tanzanian government enforces its labour laws. These challenges are not restricted to Chinese-owned firms.”

Barrick’s plan to sell the African Barrick Gold is seen by some analysts as a strategy to “off-load underperforming assets.” But other analysts add that Tanzania’s unfavourable mining investment climate, characterized by ever changing mining legislation, is also pushing big investors like Barrick towards the exit.

After enacting the Mining Act 1997, which attracted large mining investors, the government came up with the Mining Act 2010 that shifted goal posts in the mining fields.

And despite the fact that the piece of the legislation made it clear that the new clauses- like those that raised royalty to four per cent, obliging government’s mine ownership of about 10 per cent and those urging mining firms to list at the Dar es Salaam Stock Exchange- would not affect the existing miners, pressure kept growing for the miners to comply.

And in fact ABG was one of the first mining firms to agree to pay the four per cent royalty. The firm also cross-listed at the Dar es Salaam Stock Exchange from the London Stock Exchange.

Legislation aside, unreliable power supply to the mine, poor quality mined material, sour community relations at the North Mara mine are other contributing factors for Barrick’s exit from Tanzania, according to experts.

But with an insatiable appetite for gold, Chinese investors do not seem to mind these “obstacles”.

“If Barrick is no longer keen on this operating environment, it’s not surprising that Chinese firms are interested in replacing them. China is expected to overtake India this year as the world’s largest gold buyer and according to Chinese state media, its mining companies are looking overseas to meet demand,” says an analysis by the Financial Times.

The fact that ABG is listed on a stock exchange guarantees some levels of transparency in the Chinese operations in the country, once and if the deal is sealed.

But how and whether the country will benefit from the entry of the Chinese on the Tanzanian gold scene is a more complex issue, which goes beyond the willingness of the Chinese, or other miners for that matter, to share the revenue from minerals with the government or local communities.