The China Development Bank (CDB) has agreed to invest about $100 million in Hong Kong-listed Dingyi Group, to jointly develop a potash project in the Republic of Congo.

The funds will be channeled through the China-Africa Development Fund, a wholly owned subsidiary of China Development Bank (CDB).

Hong-Kong based Dingyi Group is an investment house focused on the natural resources sector and the investment is one part of its long-term strategy to invest in potash on the continent.

Potash or potassium minerals are the main ingredients used mostly in fertilisers.

China-Africa Development Fund, established in 2006, is a $5 billion Africa-dedicated fund.

The Dingyi Group is also in the last stage of acquiring Australia’s Elemental Minerals, which owns 93 percent of the Sintoukola potash project in the Republic of the Congo, also known as Congo-Brazzaville.

Mr Kevin Su, the Chief Executive of Dingyi said he expects its annual output to reach about two million tonnes once Dingyi starts to develop the project.

“The potash project in Africa will need big investments in the coming years and CDB will be a great partner to have to help us to finance the project,” Su said.

The early-stage cost for the potash project in the Republic of the Congo, including investments in local infrastructures and logistics, may be about $2 billion. The Beijing-based investment fund, Hopu Investment, led by Fang Fenglei, would also become an investor in Dingyi, Su said.

Despite the geographical distance, economic and diplomatic ties between Beijing and many African countries have rapidly strengthened in the past decade. Besides the government-backed China-Africa Development Fund, Beijing last year pledged $20 billion in credit to African governments over the next three years.

To meet her ever increasing demand for resources for its large population, the Chinese government has encouraged domestic companies and investors to invest in natural resources businesses abroad. Particular resources that have attracted investments have been oil, gas and potash, the three most-wanted resources assets by Beijing.

Su said: “For now, China doesn’t have the pricing power in the potash business because the potash market is mainly dominated by Canada, Russia and Germany.”

China currently relies heavily on imports of potash, which accounts for about 50 percent of annual demand.

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