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Dr. James A. Harris,
Sr.*
Africa and the Middle East Area
Minerals Production,
Global Demand, and Combination
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Transcontinental Africa, including its
territories and adjacent islands, possesses enormous wealth and huge
natural resources, ranking Africa at the top among nations in terms
of the amount of world reserves of bauxite, chromite, cobalt,
diamond, gold, manganese, phosphate rock, platinum-group metals (PGM),
titanium minerals (rutile and ilmenite), vanadium, vermiculite,
zirconium and petroleum. Africa covers a land area of 30.3 million
square kilometers representing a land area that is more than three
times the size of the United States.
The Middle East Area encompasses a
land area of 9.7 million square kilometers compared with 9.2 million
square kilometers for the United States. Huge crude petroleum and
vast natural gas exploration and production, and processing
represent the most significant sectors of the wealth and natural
resources economies of the Middle East nations.
The realities reported by the
International Monetary Fund World Economic Outlook Spillovers and
Cycles in the Global Economy (Table-A) make it apparent that the
huge amount of wealth and vast quantities of natural resources in
Africa and the Middle East Area, as well as the productive
activities, have failed to narrow the wide gap that exists between
the increasing magnitude of the Advanced Economies Shares in
Aggregate Gross Domestic Product (GDP), Exports of Goods and
Services and the smaller size in this Aggregate allocated for Africa
and the Middle East Area.
In the Advanced Economies
Classification by the IMF World Economic Outlook Group, the United
States Gross Domestic Product (GDP) is 37 percent of the total for
the group, followed by the Euro Area with 28.2 percent of the total
for the group; Japan held 12.1 percent of the total for the group;
the United Kingdom was 6.2 percent for the group; and Canada was 3.4
percent of the total for the group as presented in the IMF Table A.
Classification by World Economic Outlook Groups and Their Shares in
Aggregate GDP, Exports of Goods and Services, and Population, 2006
(1).
The Gross Domestic Product (GDP) wide
gap between countries, in effect, should not exist. In this respect
the Other Emerging Market and Developing Countries Classification by
the IMF World Economic Outlook Group the result for Africa GDP is
7.0 percent of the total for group; Sub-Sahara is 5.4 percent of
total for group; and the Middle East is 5.9 percent of total for
group, thereby detailing the wide disparity Economic gap in the
nations Gross Domestic Product, 2006 (2)
The Africa and the Middle East Ares did not produce at a required
maximum output performance level as was noted in a study conducted
by the United States Geological Survey (USGS). In the study by the
USGS, which presents some results from the international mineral
exploration activities from 1995 through 2004, the indications are
that the leading regions for gold exploration, 1995-2004, were (a)
Latin America, (b) Canada and (c) the United States. This same
ranking order was maintained for copper exploration activity by
region, 1995-2004; Latin America, Canada and the United States (3).
The U.S. Geological Survey (USGS) study shows that the diamond
exploration activity in Africa remained relatively at a constant
level between the 1995-2004 period (4). Latin America, in 2004, led
all regions in the classification of the region with the largest
amount of exploration activity (5). Heightened interest in
exploration activity by Africa was in the joint gold and diamond
exploration, which represented a level of over 70 percent of the
African total exploration.
In comparison with these developments
the platinum-group metals (PGM) exploration sites gained momentum
and reached the level of 40 exploration sites in 2004, a sharp
increase from 3 exploration sites in 1995 (6).
The Africa and the Middle East Area,
although endowed with enormous wealth and vast natural resources,
have not produced multinational conglomerate enterprises or global
corporations that rank among the top ten of the Fortune Global 500
World’s Largest Corporations. The prevailing global strategy of the
Fortune Global 500 World’s Largest Corporations, namely the
industrial and economic growth engine of the global economy,
encompasses the optimum utilization and allocation of natural
resources ands raw materials including 5 multinational enterprise
oil companies concentration within the top 10 of the Fortune Global
500 (7).
The Africa and the Middle East Area
Minerals needed global competitive advantage strategy demands have
sought and pursued their own development of some multinational
enterprises operations anticipating the engagement in international
trade and investment inclusion in the exclusive Global 500 World’s
Largest Corporations.
Globalization, which is accompanied by
components of global networks-of-networks, produces its own
concerted action, combination and collective control in the
determination of economic policy and international trade and
investment while being inseparable, in some instances, from
receiving direct government sponsorship.
The most significant and
distinguishing feature of this assessment by the author is that
combination dominated and determined the origination, consolidation,
mergers, and management which have resulted in the global
institutions and enterprises of the Fortune Global 500 World’s
Largest Corporations and, most notably, the Fortune 500 America’s
Largest Corporations; the author’s assessment relates directly to
the dynamics driving the current combination, and its historical (8)
worldwide marketing arrangements in contrast with the wide
dispersion of the Africa and the Middle East Area independent
companies; it is an evaluation of the determination of the
formation, methods and types of combination instruments of
dominance; it is an appraisal by the author of the rapidly
increasing demand for the urgent ascendancy of the pervasive
combination in the Africa and the Middle East Area implementation of
the processes of concentration similar to the Fortune Global 500
World’s Largest Corporations.
COMBINATION
Combination is the manifestation of
concerted action, concentration of capital or securing concentration
of control and management of great consolidations of horizontal
integration, vertical integration, and circulate integration
enterprises.
The processes of concentration of large and diversified industries
are sources of the formation of combination. There are several types
of combination and the following selection presents some insights on
the utilization of combination.
The Holding Company
The holding company originated and was
developed after the U. S. Civil War by the House of Morgan through
the creation, formation, operation and management of the Standard
Oil Company of New Jersey, which is currently Exxon Corporation. The
Holding company, by definition, is any enterprise, which is
incorporated or unincorporated, that has the ability to control, or
exercise power over, the organization and management of a single or
several other companies through, in part at least, its ownership of
voting stock and securities or other several companies (9).
Gramm-Leach-Bliley
Act (U.S. Financial Modernization Act)
The prevalence and pervasiveness of
the holding company have gained in importance and have succeeded in
being part of the official United States government policy and
administration particularly when the Gramm-Leach-Bliley Act was
enacted by the U. S. congress and became Public Law 106-102 with
President Clinton’s signature on November 12, 1999.
In effect Title 1 Facilitating Affiliation Among Banks, Securities
Firms, and Insurance Companies ensures the legitimacy and makes
operational the worldwide effects of the Holding company (10).
The Gramm-Leach-Bliley Act, and its advocacy of financial
modernization, creates a New “financial holding company” under
section 4 of the Bank Holding Company Act. Such new “financial
holding company” can operate in a statutorily provided list of
financial activities, among which are included insurance and
securities underwriting and agency activities; merchant banking; and
insurance company portfolio investment activities. The
classification of activities as “complementary” to financial
activities are authorized (11).
The enactment of “facilitating affiliation” when undertaken by the
Fortune Global 500 World’s Largest Corporations and the Fortune 500
America’s Largest Corporations, galvanizes the intensity surrounding
combination, consolidation, common control, and centralization
financing, thereby heightening the production of global competitive
advantage outcomes.
The global dimension of the holding company manifests itself, as
reported on the ExxonMobil web site, through the creation of China’s
first fully integrated refining and petrochemicals and fuel
marketing international joint venture with foreign participation. In
addition, the Fujian Petrochemical Company Limited (FPCL) is owned
50 percent by the China Petroleum and Chemical Corporation (Sinopec),
a state-owned holding company, and 50 percent owned by the Fujian
Government.
ExxonMobil China Petroleum and Petrochemical Company Limited (ExxonMobil)
is a wholly-owned affiliate of ExxonMobil Corporation, which is a
pure holding company, and Saudi Aramco SinoCompany Limited (Saudi
Aramco), which is a wholly-owned affiliate of Saudi Aramco.
An inauguration ceremony held at The Great Hall of the People in
Beijing marked the Formal government approval of the joint venture
contracts and the granting of business licenses for their two
international joint ventures in Fujian Province, namely, (1) Fujian
Refining & Petrolelum Company Limited and (2) Sinopec SenMei (Fujian)
Petrolelum Company Limited.
The joint venture company, formally registered as “Fujian Refining &
Petroleum Company Limited (FPCL) (50 percent), ExxonMobil China
Petroleum and Petrochemical Company Limited (FPCL) (25 percent), and
Saudi Aramco Sino Company Limited (25 percent).
The multiplier effect is optimizing outcomes. Located in Quanzhou,
Fujian Province, the Fujian Refining and Ethylene Joint Venture
Project will expand the existing refinery from the 80,000
barrels-per-day (4 million tons-per-year) to the expanded 240,000
barrels-per-day (12 million tons-per-day). The upgraded refinery
will primarily refine and process Sour Arabian crude, in addition,
the Project will construct an 800,000 tons-per-year ethylene steam
cracker; an 800,000 tons-per-year polyethylene unit; a 400,000
tons-per-year polypropylene unit; and an aromatic complex to produce
700,000 tons-per-year of paraxylene. The support facilities,
including a 300,000 ton crude berth and power cogeneration, will
also be built.
The investment demand and supply maximization of the “Facilitating
Affiliation Among Banks, Securities Firms, and Insurance Companies”
of the Gramm-Leach-Bliley Act also provides the foundation and
formation and operation frame of reference for the financial
modernization of Africa and the Middle East Area own-initiated
combination and holding company.
Cartels
The cartels seek the unrestrained
producers who avoid the role of competition market forces that are,
in effect, subject to planned collective and concerted control
specifically for the benefit of the producers. Some cartels have
been created by negotiation through treaties between and by States
and regional institutions (12).
Cartels are often described and characterized as international
marketing arrangements that recognize the producer members who
transact commercial activities or commerce in the same or identical
scope or line of business activity while, at the same time, avoiding
competition with each other (13).
The issue of cartels in comparison to or in contrast with the
“Facilitating Affiliation” enactment in the Gramm-Leach-Bliley Act,
which is examined in the preceding section, currently remains
without determination or settlement.
From an historical perspective cartels have experienced a persistent
and sustained period of market domination in conducting
international business diplomacy and detailed through such studies
as Cartels in Action; UK Foreign Trade Bureau Cartels 1944-1946;
International Petroleum Cartel; and Cartels, Concerns and Trusts
(14).
The U. S. Department of Justice is in the forefront of prosecution
and leading the energetic and industrious antitrust investigations
against unlawful cartels. In May 2003, and in the delivery of his
statement before the British Institute of International and
Comparative Law, the Acting Assistant Attorney General Antitrust
Division, U.S. Department of Justice R. Hewitt Pate addressed the
issue of “Antitrust-Cartel Enforcement: The Core Antitrust Mission.”
Mr. Pate asserted that cartels are an attack against free market
economies and he noted that the antitrust laws represent the most
effective brake against the cartelization of industry.
The Organization of the Petroleum Exporting Countries (OPEC) is a
cartel par excellence, being the best of a kind, and its members
include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria,
Qatar, Saudi Arabia, The United Arab Emirates, Angola, and
Venezuela. The OPEC is an intergovernmental organization of
producers.
The U. S. Energy Information Administration/International Energy
Outlook 22006 reported international energy projections through
2030. The world oil demand projected growth is from 80 million
barrels per day in 2003 to an estimated 98 million barrels-per-day
in 2015, and by 2030 it is projected to reach 118 million
barrels-per-day well above the 2015 level. The China and India
anticipated sharp increase in the consumption of oil will account
for a projected 43 percent of the total increase in the consumption
of world oil (15).
OPEC’s expanding production capacity can meet the sizable increasing
and rising demand for production which is demonstrated in Table 3a.
OPEC Oil Production The largest market share of OPEC’s oil
production is located in those countries that border the Persian
Gulf. Iraqi production has not been a part of any OPEC quota
agreements since March 1998, according to the Energy Information
Administration (EIA) Country Analysis Briefs dated November 26,
2004.
OPEC collects price data on a basket of seven crude oils. In
addition to the OPEC Basket, several other crude oil prices are used
to follow world oil market conditions. The OPEC “Basket” collection
of price data is used for the purpose of monitoring world oil demand
and supply conditions. Table 3a OPEC Oil Production.
Community of Interest
The German giant
Interessengemeinschaft Farbenindustrie A.G. (literally, Dyestuffs
Industry Community of Interest, Inc.) was formed in 1925. The German
phase of the Community of interest formation began in1904 when the
following “Big Six” agreed to enter a fifty year agreement designed
to transfer information patents and licensing, and to Supply all
parties to the agreement with materials, to expand internationally
in harmony, and to share profits (16).
a. BASF (Badische Anilin und Soda-Fabrik
of Ludwigshafen)
b. Bayer (Farbenfabriken vorm. Friedrich Bayer & Co. of Leverkusen)
c. Hoechst (Farbwerke vorm. Meister Lucius und Bruening of Hoechst
am Main)
d. Agfa (Aktiengesellschaft fuer Anilinfabrikaten of Berlin)
e. Cassella (Leopold Cassella & Co. of Frankfurt)
f. Kalle (Kalle & Co. of Biebrick)
A dominant strategy of the “Big Six”
community of interest was the allocation of production and
distribution without competition and share profits. After its
incorporation in 1925, I.G. Farben Industrie A.G. exercised its
domination over the world chemical industry and began the
manufacture of rayon filaments and fibers, synthetic nitrogen,
fertilizers, light metals and alloys, industrial gases, synthetic
gasoline, synthetic rubber, and plastics, among other inventions and
innovations.
The Bayer Company’s current web site, referring to “A Time of
inventions,” revealed that within the network of I. G. Farben sites,
it was the Leverkusen site that also developed into a key production
location for basic chemicals and intermediates, as well as the
largest dyestuffs production site. Rubber synthesis and modern
polymer chemistry were the focus of research activities at the time.
In the early 1930s, the Bayer Company through the announcement on
its current web Site, stated that polyacrylon itrile-butadiene-rubber
(Perbunan) was developed at Leverkusen, and Otto Bayer invented
polyethanes in 1937. The Wupperal-Elberfeld facility continued its
successful research into drugs to control malaria. Among the Bayer
Company numerous inventions and varied Nobel Prize winning
discoveries is aspirin, the wonder drug.
With particular regards for Africa and the Middle East Area, the
Bayer Company businesses and trade relations are represented
throughout the region. Special emphasis and attention have been
given to crop protection as a major focus and formulation plants are
located in Kenya and South Africa. In Bayer’s Africa strategy, South
Africa holds a key position with almost 50 percent of the African
continent’s volume of sales being achieved in South Africa.
I.G. Farben Industrie introduced and advanced a successful and
influential industrial organization behavior and business management
strategy and practice, which most appropriately, is called the
“Tarnung Program meaning what Joseph Borkin interpreted as
“Corporate Camouflage,” or concealment.
The authors Gerard Aalders and Cees Webes have interpreted the
“Tarnung Program” to mean cloaking (18) (the art of concealing the
true ownership of a company from the authorities). For example, a
common technique employed was that the (I.G.) owner transferred his
firm’s assets, patent and licensing agreements, which are situated
on the territory of the future enemy, to the identity of a neutral
entity who performed as the nominal owner thereafter.
Corporate camouflage, according to Joseph Borkin, is the art or
business management Decision making and management practice of
concealing foreign properties and capital from enemy governments
(19).
The U. S. Congress conducted investigations and published
documentation detailing the meaning and structural characteristics
of community of interest, which is one of the findings of the 1913
House Pujo Committee Report and a forerunner of the 1990 Gramm-Leach-Bliley
Act. The House Pujo Committee Report, As Regards Concentration of
Control of Money and Credit, made its decision and concluded that,
with particular reference to the evolution of the controlling
groups, “there is an established and well-defined identity and
community of interest between a few leaders of finance, created and
held together through stock ownership, interlocking directorates,
partnership and joint account transactions, and other forms of
domination over banks, trust companies, railroads, and
public-service and industrial corporations, which has resulted in
great and rapidly growing concentration of the control of money and
credit in the hands of these few men” (20).
MINERAL PRODUCTION
TO WORLD DEMAND
The proportion of the world base
metals production and consumption, which is Attributed to Africa,
did not satisfy or equal the increasing demand. Africa has a huge
Abundance of mineral reserves and leads in the top echelon among all
countries, first or Second in the share of global reserves of metals
such as bauxite, cobalt, diamond, phosphate rock, platinum-group
metals (PGM), vermiculite, and zirconium (21).
World demand for metals increased at higher rates and volumes than
the production of mineral commodities in Africa, in effect, a
scenario indicated in TABLE 4. AFRICA PRODUCTION OF SELECTED MINERAL
COMMODITIES IN 2004.
United States Geological Survey Minerals Yearbook—2004
The U.S. Geological Survey Minerals Yearbook—2004 issues the result
that mine production of mineral commodities such as bauxite, copper,
gold, and lead did not reach the 1990 level of production (22).
Africa’s production of manganese mine output exceeded 25 percent of
the global production and was just under one-fifth of the refined
cobalt world output.
Without the competitive advantage of the utilization of
nanotechnology and the applied nanoscale revolution components,
where one nanometer is a billionth of a meter, the global leader in
the commodities minerals production of chromite and ferrochrome,
gold, manganese ore, palladium, platinum, and vanadium was South
Africa. In the world’s output of manganese and ferromanganese,
rutile, and zircon (23), South Africa ranked at the top and in
second place.
The full utilization of production and capacity expansion and
diversification in Africa demand the optimum application of
nanotechnology and its application to Africa’s transcontinental
industrial production activities. Nanotechnology is
supraminiaturization and submicron-scale assembly; applications
include the manufacturing of nanostructured metals, and
nanofabrication on a chip (24).
Africa’s output of aluminum production in the world amounted to an
estimated 5 percent in 2004 (see Table 4). The increase in output of
refined aluminum is estimated to have a relatively constant rate of
increase of about 7 percent annually for the period 2004 to 2011.
The 2004 structure of copper mine production in Africa is
represented by Zambia with an allocation of 65 percent; South Africa
accounted for 16 percent while the Congo (Kinshasa) produced 11
percent. In contrast with the Year 1990, Africa’s proportion of
global copper mine production declined to a level below 5 percent in
2004 from the higher level of 14 percent in 1990 (25).
The modernization, expansion and technological advancement of
Africa’s copper mine production have the delivery capability of the
achievement of equilibrium with I\increasing world demand through
combination with Mitsui Mining & Smelting Co., Ltd. (Mitsui Kinzoku)
development and production of nonferrous metals to support all kinds
of industries. Mitsui kinzoku’s copper operations are centered at
Tamao Smelter which is run by Hibi Kyodo Smelting Co., Ltd. In
addition to copper metallurgy, The company produces sulfuric acid
and precious metals such as gold and silver as secondary products.
The company also aims to boost operational development by business
collaboration with Nippon Mining & Metals Co., Ltd (26).
Africa’s gold mine production share of world gold min production,
between the 1990-2004 period, declined from the high of 32 percent
in 1990 to a low of 23 percent in
1. The falling production levels of gold in Africa during 2004
covered several Countries including decreases in South Africa gold
mine production, falling output in Ghana’s gold mine production,
declining gold mine output in Mali, and decreases in Production in
Guinea. In contrast with this pattern of decreasing output of gold
Production in selected African countries, there were several African
countries that Experienced increasing gold mine production, namely,
Tanzania, Botswana, Niger, and Zimbabwe.
The Mitsubishi Materials Group Gold Label carries a worldwide
reputation for trust in the market and, through the strategic
alliance of the Tokyo International Conference on African
Development (TICAD), already has in place the mechanism and
instruments for supporting the acceleration of the modernization and
technological industrialization of mining and minerals production in
Africa’s transcontinental economy. The Mitsubishi Materials Group’s
precious metals business activities possess solid brand power and
proved reliability (27).
Iron ore, which is the iron content of ore, produced in Africa was
led by South Africa’s production that registered at 71 percent,
followed by Mauritania with 21 percent and Egypt’s allocation of 6
percent of continental output.
With reference to iron and steel production in Africa, covering the
period from 1990 to 2004, South Africa’s proportion of total African
ore output decreased to the level of 51 percent from 66 percent.
During the same period, 1990-2004, Egypt’s proportion of iron
production increased to 29 percent from the level of 15 percent;
Algeria and Libya made up the remainder of the iron production
increase (28).
The African production level of crude steel, in 2004, remained
constant and about flat even though South Africa’s share of
continental crude steel production was 58 percent of regional crude
steel production; Egypt was 27 percent and both Algeria and Libya
were at the 6 percent level.
The African proportion of world crude steel production, in 2004,
totaled almost 2 percent (see Table 4) while Africa consumed just 2
percent of global finished steel consumption. The global scale
industrialization of Africa’s transcontinental iron and steel
production and consumption represent the African initiated engine of
industrial regeneration, combination and economic growth when taking
into consideration the optimum utilization of the Mitsui& Co., Ltd.
Iron & Steel Raw Materials and Non-Ferrous Metals Business Unit
strategy of investment aggressively in raw material sourcing
projects that are based on the concept of develop and import and
taking initiatives to develop new sources (29) .
African mine production of nickel, between 2003 to 2004, declined by
about 4 percent from the higher level of production in 2003. The
Southern African countries production of nickel dominated the output
on the continent. In contrast with the trend, South African
consumption of nickel gained in 2004 reaching the level of 25,000 t
over the 2003 level of 24,000 t.
The major proportion of nickel production of South Africa resulted
from a coproductr of Platinum-Group-Metals mining. South Africa
represented 47 percent of African continental nickel mine production
in 2004; Botswana accounted for 42 percent followed by Zimbabwe
allocation of 11 percent.
The Platinum-Group Metals (PGM) consist of platinum, palladium,
rhodium, iridium, ruthenium, and osmium. South Africa’s output of
PGM accounted for the majority of PGM production in Africa,
representing 97 percent and followed by 96 percent for the output of
platinum and palladium, respectively. South Africa accounts for most
of the world’s production of PGM.
The Africa Platinum-Group Metals (PGM) production and global demand
require an Africa-owned-combination and investment demand which, if
invited, would be ignited by the globalization “joint development
contract” created by Mitsubishi Materials Corporation, Mitsubishi
Corporation and Furuya Metal Co., Ltd. for the purpose of the
development of Platinum-Group Metals (PGM) recycling technology
applied to such scraps as used catalyst for feed material (30).
The multiplier effect of the recommended Africa-owned combination,
if it is entered an African initiated and requested participation in
the “Joint Development Contract,” would add international
consolidation and expand the industrialization of the three parties
aim at early commencement of the most competitive Platinum-Group
Metals (PGM) recycling business through the utilization of
Mitsubishi Materials Corporation’s copper smelting technologies and
Furuya Metal’s processing know-how of PGMs, as well as the combining
of Mitsubishi Corporation’s PGMs investment transactions expertise
(31). PGMs have a vast array of applications and uses, among which
are chemical catalyst, auto catalyst, glass making furnace,
electrical parts, and magnetic memory devices (32).
INDUSTRIAL MINERALS PRODUCTION
The U.S. Geological Survey Minerals Yearbook - 2004 recognized an
essential point That Africa is an important producer of many
industrial minerals. For example the Number one country in the
global output of diamonds by value was Botswana. The Single leading
country in the production of tanzanite worldwide was Tanzania, while
the Leading countries in the industrial minerals output of ruby,
sapphire, and emeralds were Kenya, Madagascar and Zambia,
respectively. In the worldwide output of the industrial mineral
known as vermiculite, South Africa’s share was 40 percent (33).
Africa’s proportion of world diamond output by volume amounted to 48
percent. The diamond production levels increases were prevalent for
African countries including Angola, Botswana, Central African
Republic, Congo (Kinshasa), Guinea, Namibia, Sierra Leone, South
Africa, and Tanzania (see Table 4).
The global value of rough diamond production, in 2004, attained the
level of $10.6 billion and Africa’s share registered at 60 percent.
The delineation of this structure encompasses Botswana representing
24 percent of the value of global rough diamond output, followed by
both tied in second place South Africa and Angola with a level of 11
percent each, Congo (Kinshasa) at 10 percent and Namibia accounted
for 5 percent.
MINERAL FUELS
In 2003 the leading oil and gas
companies in Africa were made up of enterprises that included
Sonatrach (Algeria), Sonangol (Angola), Egyptian General Petroleum
Corp. (Egypt), National Oil Corp. (Libya), Nigerian National
Petroleum Corp. (Nigeria), and Sasol, Ltd. (South Africa) (34).
The UN Security Council lifted a more than three-year-old ban on
diamond imports from Liberia, applauding the Government’s
cooperation with the “ Kimberly Process,” which is a mechanism set
up to keep so-called “blood diamonds” from reaching world markets.,
Re.: Security Council, SC/9006, 27 April 2007. Begun in 2000 by
Southern African diamond producing countries, the Kimberly Process
led to the adoption in November 2002 in Interlaken, Switzerland, of
the international Certification Scheme for rough diamonds, based
primarily on national certification schemes and on
internationally-agreed minimum standards.
The world coal reserves are distributed over a substantially vast
area. More than two-thirds, or about 67 percent, of the world’s
recoverable deposits are found in four countries, namely, the United
States (27 percent), Russia (17 percent), China (13 percent), and
India (10 percent). In the ranking of the order by priority shares
the anthracite and bituminous coal, in 2004, represented 53 percent
of the world’s estimated recoverable coal deposits (on a tonnage
basis); the sub-bituminous coal made up 30 percent, and lignite’s
share was 17 percent (35).
South Africa is the major coal producer in the Africa region
representing 98 percent, in 2004, of the African continent’s
production of coal (36). Some other African countries with sources
of coal production include Botswana, Zambia and Zimbabwe. Africa
represented an estimated 5 percent of the total world anthracite and
bituminous coal output (37).
In the Energy Information Administration/International Energy
Outlook 2007, World Coal Production by Region, 2004-2030, the
continued production of coal by the dominant three countries, China,
the United States and India, will insure the domination of the trend
in sustained coal output.
Natural gas is a critical fuel in the electric power and industrial
sectors. It is also a preferential selection for utilization in the
power sector application for new generating plants promotion of
relative fuel efficiency. The industrial sector represented, in
2004, a 44 percent share of world natural gas consumption (38).
In 2004 the Africa regional production of dry natural gas reached
about a 4 percent rate of increase over the level in 2003. The major
share of the increase was do to the production from Nigeria. There
were some gains in output accounted for by other countries, i.e.,
Libya, Ghana, Tanzania, Mozambique, Equatorial Guinea, and Tunisia.
The structure of African dry natural gas production indicated that
Algeria’s proportion of Africa’s dry natural gas production in 2004
was 59 percent; Nigeria’s share was 21 percent followed by Egypt’s
share at 11 percent (39).
The African region’s natural gas production, which lacks the
technological capability and the capacity utilization to satisfy the
magnitude and rising global demand for natural gas consumption,
requires the multiplier effect connected with technological
advancement that increases, expands plant capacity, and diversifies
natural gas production. The technological readiness is available.
For example, the ENEOS-Nippon Oil Corporation (NOC) Group, which is
Japan’s largest integrated oil company, conducts exploration for and
the development of oil, natural gas and other mineral resources, as
well as the extraction, processing, storage, sale and shipment of
petroleum, natural gas, and other mineral resources. The
maximization of TICAD is the priority demanded.
The Nippon Oil Corporation (NOC) develops and markets high quality
lubricants for vehicular and industrial uses. NOC has established
international joint venture lubricant manufacturing and
international marketing relationships in various countries around
the world (40).
In the Oil & Gas Journal Data Book 2005 Edition the major African
countries Estimated Proved Reserves in gas included Nigeria with
176,000 (billion cubic feet) in 2005, an increase of 17,000 billion
cubic feet (bcf) over the level in 2004. Algeria’s Estimated Proved
Reserves were 160,500 (bcf) in 2005 which represented a gain of only
500 (bcf) above the 2004 level. Some other African countries with
smaller quantities of Estimated Proved Reserves in gas, in 2005,
were Egypt (58,500 bcf); Libya (52,000 bcf); Mozambique (4,500 bcf);
Cameroon (3,900 bcf); Congo, Brazzaville (3,200 bcf); and Sudan
(3,000 bcf) (41).
The petroleum industry industrial organization encompasses the
totality of relevant Market and lines of commerce that include the
distinguish characteristics such as (a) crude oil and natural gas
production industry; (b) exploration; (c) the refining and
marketing; (d) the transportation (pipelines, oil tankers, etc.)
industry; (e) production sharing agreements; (f) patents and
licensing agreements; and (g) strategic alliances. In the field of
industrial organization the Exxon Corporation is a conglomerate,
which is a non-industry that supersedes the classification by
industry, and originated uniformity encompassing horizontal
integration, vertical integration and conglomerate integration.
African Union
Transcontinental Petroleum Basin (AUTPB)
The African continent is situated in a
basin of petroleum, an African Union (AU) transcontinental petroleum
basin, encompassing the African continent’s independent nations,
adjacent territories and islands that cover a land area of 30.6
million square kilometers, which measure more than 3 times the size
of the United States (42).
The African countries “producing oil wells,” and ranked in order of
the number of operational oil wells in 2003, have revealed a
structure consisting of Nigeria (2,586); Algeria (1,346); Libya
(1,470); Egypt (1,267); Angola (1,073),; and Congo, Brazzaville
(445) (43).
In 2004 the major oil production African countries were Nigeria,
Libya, Algeria, Angola, Egypt, and Equatorial Guinea. Nigeria’s
estimated oil production in 2004 was 2.3 million barrels per day
(b/d), which represented a 9.6 percent change above the actual 2.1
million barrels per day (b/d) in 2003. Libya held estimated oil
production at 1.5 million barrels per day (b/d) in 2004, an increase
of 8.6 percent beyond the actual oil production of 1.4 million
barrels per day (b.d) in 2003. Algeria held the estimated oil
production level at 1.2 million barrels per day (b/d) in 2004 that
achieved a gain of 8.5 percent over the 2003 level of actual oil
production of 1.1 million barrels per day (b/d).
Angola held estimated oil production of 980,000 barrels per day
(b/d) in 2004, reflecting a sharp increase of 11.4 percent above the
2003 actual oil production level of 879,000 barrels per day (b.d)
(44).
The current and future directions of the African countries strategic
petroleum and petrochemical industries exhibit some industrial
transformation achievements arising through increases in capital
formation in oil exploration, larger oil production capacity
utilization, investment diversification, and rising levels of
output.
More specifically, the Mitsubishi Corporation (MC), which is Japan’s
largest general Trading company, is at the present time actively
promoting upstream businesses in conjunction with MC Exploration
Co., Ltd.,, focusing mainly on West Africa and, in the meantime,
have commenced oil production as an operator. In Libya, the
Mitsubishi Corporation won the tender for several oil exploration
blocks with partners, and acquired a participating interest in a gas
exploration and production (E & P) block located in the Republic of
Tunisia (45).
Some African countries competitiveness in the petroleum and
petrochemical industries performances have improved as a result of
the delivery of technological capabilities. More specifically, the
Nippon Oil Corporation (NOC) and Nippon Oil Exploration Limited (NOEX),
a wholly owned subsidiary, successfully concluded the Exploration
and Production Sharing Agreement (“EPSA”) for Area 2 Blocks 1 & 2
with National Oil Corporation (“NOC”), the state oil company of the
Great Socialist People’s Libyan Arab Jamahiriya (“Libya”). The
partners in the blocks are NOEX (90 percent: Operator) and
Mitsubishi Corporation (10 percent). The Nippon Oil Group is
expanding its upstream operations and conducting exploration,
development and production activities around the world. It is keen
to expand its upstream operations in Libya, where one of the world’s
largest oil and gas reserves are found (46).
China National
Offshore Oil Corporation (CNOOC)
The African countries current and
future directions in the strategic and critical petroleum and
petrochemical industries have accelerated the industrial and
economic growth driving forces, and expanded the industrialization
processes in connection with investment injections funneled through
the China National Offshore Oil Corporation (CNOOC), a state owned
Chinese company, announcement that its subsidiary, namely CNOOC
Africa Limited has signed some production sharing contracts (PSC)
for six blocks in Kenya. The six production sharing contracts (PSC)
cover blocks identified as Block 1, Block 9, Block 10A, Block 12,
Block 13, and Block 14 in Kenya. The blocks are located in three
basins of LAMU, ANZA, MANDERA, with a total area of 11, 343 square
kilometers. The signing of these six production sharing contracts
indicate China National Offshore Oil Corporation Limited (CNOOC) has
successfully extended Its overseas exploration activities to East
Africa. This vast area has attractive and untapped exploration
potential according to the Web Site CNOOC Limited Expands Overseas
Exploration to Kenya Web Site (47).
The African countries current and future directions in the strategic
and critical Petroleum and petrochemical industries became even more
operational when CNOOC Africa Limited, a subsidiary of the China
National Offshore Oil Corporation (CNOOC) Ltd., signed a production
sharing contract (PSC) for an oil block in Equatorial Guinea. The
contract for Block S was signed with the Ministry of Mines, Industry
and Energy, and the National Oil Company of Equatorial Guinea (GEPetrol).
The exploration period of the contract is set at five years and
CNOOC Ltd. Acts as the technical operator. Under the terms of the
contract, the CNOOC Ltd. is committed to conducting seismic data
interpretation and drilling exploration wells (48).
The United States Congress Congressional Budget Office has reported
that China, with the United States ranked in first place,
represented the number 2 biggest consumer of oil in 2004. In the
above Figure 2-1 Petroleum Consumption and Domestic Oil Production
in China, 1980 to 2005 (millions of barrels a day), China’s
petroleum consumption registered at the annual rate of 15 percent
China, the world’s most rapidly growing major oil-consumer, has made
oil security a top priority for China, and energetically has pursued
a “go-out” strategy for new and stable sources of oil in the
international market (49).
More specifically China’s biggest offshore oil producer, which is
the China National offshore Oil Corporation (CNOOC), will pay US
$2.3 billion for a stake in a Nigerian oil and gas field. The CNOOC
signed a definitive agreement with South Atlantic Petroleum Ltd. to
acquire a 45 percent working interest in an offshore oil mining
license, OML130. The deal required the approval of the Nigerian
Nation Petroleum Corp. (NNPC) and the Chinese government. The oil
block, operated by the oil company TOTAL contains the A Kpo
deepwater field, which is about 200 kilometers off the coast of Port
Harcourt, and will have the capacity to pump 225,000 barrels per day
after 2008 (50).
The CNOOC has acknowledged that its purchase of this interest in
OML130 provides some advantages and helps to gain access to an oil
and gas field of huge interest and upside potential while located in
one of the world’s largest oil and gas basins. The multiplier effect
of rising aggregate demand for substantial increases oil production
and the aggregation of consumption spurred increases in the level
and size of oil exploration activity and petroleum output from
several other African countries, i.e., Cameroon, Chad, Congo
(Brazzaville), Gabon, Mauritania, Niger, Sao Tome and Principe,
Ivory Coast, Sudan, Eritrea, Somalia, and South Africa.
One determination of the measurement of the impact of crude oil
production is to examine optimum allocations or derivatives from
that are yielded from one barrel of crude. The following frame of
reference, “Petroleum Products Yielded from One Barrel of Crude,
2005, was issued by the United States Energy Information
Administration (EIA) (51).
MINERAL INDUSTRIES
OF THE MIDDLE EAST
The 15 countries of the Middle East
that are included in the U. S. Geological Survey Minerals Yearbook
Area Reports: International 2004 Africa and the Middle East Volume
III, are representative of a land area of over 6 million square
kilometers, which is an estimated 66 percent the size of the United
States. This area is nearly 4 percent of the world’s land mass.
The production and processing of crude oil and natural gas, where
crude oil is measured in barrels and a barrel of 42-U.S. gallons of
crude oil yields more than 44 gallons of petroleum products, form
the core upon which the Gross Domestic P most of the countries in
the region rely, see the preceding TABLE 4 MIDDLE EAST PRODUCTION OF
SELECTED MINERAL COMMODITIES IN 2004 (52).
The investment data and political risk frame of reference focused on
the fact that the Area’s minerals were dominated by state owned
business enterprises. The upstream prospects included the expected
construction or expansion of regional developments that involved the
alumina refinery, aluminum smelters, ammonia and urea plants, cement
plants, coke manufacturing plants, crude oil refineries, liquefied
natural gas (LNG) plants, methanol plants, natural-gas-processing
plants, and natural-gas-to-liquid facilities (53).
The Organization of the Petroleum Exporting Countries (OPEC)
The Organization of the Petroleum Exporting Countries (OPEC) possess
or control 75 percent of the oil reserves in the world. In 2005 the
Middle East member countries represented the bulk of the oil
reserves of OPEC, especially with countries such as Saudi Arabia,
Iran and Iraq proportions that make up 56 percent of the OPEC total
proven reserves now amounting to a level of more than 900 billion
barrels.
The following Figure, OPEC Share of World Crude Oil Reserves (2005),
presents a graphical depiction of the strategic and critical role of
The Organization of the Petroleum Exporting Countries in decision
making involving world economic oil and gas input and output
relations, oil production, and trade and investment in the world
economy.
The U. S. Energy Information Administration (EIA) provided a
statistical analysis of the production of oil by OPEC countries in
Table 3a. OPEC Oil Production as part of the EIA Short Term Energy
Outlook April 2007. The OPEC 10 dominated oil production.
OPEC Share of World
Crude Oil
Reserves
Table 3a. OPEC Oil Production
The OPEC member countries, due to
their substantial proven oil reserves, engage in industrial activity
and capacity utilization that enables the increases and decreases in
output that match the fluctuating global demand for oil and natural
gas. Iraq’s degree of the determination of the level of output of
oil by OPEC remains risky due to on-going war conditions. Iraq’s
uncertain delivery capability to produce petroleum output
expectations in 2007 has the possibility of approaching an estimated
2.0 million barrels per day (56).
Iran’s oil capacity and petroleum output in 2004 was 4.1 million
barrels per day and is anticipated to grow rapidly at rising levels
up to 2015. Kuwait and the United Arab Emirates (UAE) oil production
growth trends are estimated to increase and rise rapidly in the long
run. In 2004 Kuwait produced 2.5 million barrels per day and at the
same time period the UAE output of oil was 2.8 million barrels per
day. They are estimated to experience rising rates of oil production
over the long run.
The total OPEC oil production in March 2007 was 34.7 million barrels
per day, reflecting an increase of 150,000 barrels per day above the
level in February 2007, which was 34.6 million barrels per day
(Table 3a. OPEC Oil Production).
OPEC Combination
The objective of The Organization of
the Petroleum Exporting Countries (OPEC) includes “to coordinate and
unify petroleum policies among Member Countries in order to secure
fair and stable prices for petroleum producers; an efficient,
economic and regular supply of petroleum to consuming nations, and a
fair return on capital to those investing in the industry.”
OPEC is a permanent intergovernmental organization that was created
at the Baghdad Conference on September 10-14, 1960. The five
founding members included Iran, Iraq, Kuwait, Saudi Arabia, and
Venezuela. The current members are the following nations shown on
the OPEC Web Site.
The OPEC Statute stipulates that “any country with a substantial net
export of crude petroleum, which has fundamentally similar interests
to those of Member Countries, may become a Full Member of the
Organization, if accepted by a majority of three-fourth of Full
Members, including the concurring votes of all Founder Members”.
OPEC describes and characterizes crude oil, which is the world’s
strategic and critical mineral fuel, as a naturally-occurring
substance found in certain rock formations in the earth. It is a
dark, sticky liquid which, scientifically speaking, is classified as
a hydrocarbon. This means, it is a compound containing carbon and
hydrogen, with or without non-metallic elements such as oxygen and
sulfur. Crude oil is highly flammable and can be burned to create
energy. Along with its sister hydrocarbon, natural gas, derivatives
from crude oil make excellent fuel.
The OPEC combination, with a targeted “control of oil mission”,
encountered global competitors who are the Fortune Global 500
World’s Largest Corporations, and Fortune 500 America’s Largest
Corporations.
OPEC Pricing
OPEC collects price data on a “basket”
of seven crude oils, including the following countries, Algeria’s
Saharan Blend; Indonesia Minas; Nigeria Bonny Light; Saudi Arabia
Arab Light; Dubai Fateh; Venezuela Tia Juana; and Mexico Isthmus (a
non-OPEC oil). The OPEC price, which was introduced on January 1,
1987, is an arithmetic average of these oils. OPEC uses this price
to monitor world oil market conditions.
In order to respond to changes in world oil market conditions and
the global demand for petroleum, OPEC set up a price band mechanism
that is triggered by the OPEC basket price. In accordance with the
price band mechanism, the OPEC basket prices above $28 per barrel
for 20 consecutive trading days or below $22 per barrel for 10
consecutive trading days would result in production adjustments,
thereby allowing OPEC members to manage oil production more
efficiently.
OPEC Multinational Enterprise Diplomacy
The Organization of the Petroleum
Exporting Countries (OPEC) is not the first association of
independent producers to enter voluntary agreement between producers
of oil and natural gas multinational enterprises with the aim to
dominate international marketing arrangements as well as
international business diplomacy control of petroleum.
Any activity designed at domination of
the world trade in the flow of oil must take into major
consideration the control of OPEC, the supplier of crude oil to
match the global demand for petroleum.
The classic frame of reference and foundation, or the best of its
kind, for the formation of international business diplomacy or
formation of cartels, which are aimed at emphasizing noncompetitive
behavior, the United States Congress, Committee Staff Report, “The
International Petroleum Cartel” (57).
The system of determination of production quotas and the utilization
of interlocking directorates regulate oil output ratios. An in-depth
examination of the international noncompetitive behavior mechanism
is placed under scrutiny in John M. Blair’s The Control of Oil (58).
OPEC, in recognition of maximizing
huge oil exploration and the enormous growth in Petroleum production
realities, integrated its energy independence mechanism comprising
East and West Asia in the Second Asian ministerial Energy Roundtable
held In Riyadh, Saudi Arabia, May 2, 2007. The East and West Asia
energy combination is already established, clearly defined and
mutually supportive. For example, as stated in remarks issued by
OPEC’s Secretary General, if you take the total of crude oil exports
for Asia, Europe and the United States, OPEC supplies more oil to
Asia than to Europe and the United States combined (59).
India’s Minister of Petroleum & Natural Gas addressed the Third OPEC
International Seminar on “OPEC in a New Energy Era: Challenges and
Opportunities,” and delivered the keynote address: “Petroleum and
Sustainable Development.” He emphasized the changes sweeping “the
global hydrocarbon economy” with the acknowledgement that “the
Middle East countries supply about 70% of Asia’s oil consumption.
Asia accounts for about 65% of total exports from the Middle East.
In the emerging oil world order where the Asian economic growth is
widely acknowledged to play a pivotal role, there are major
opportunities for OPEC. Forging partnerships in developing knowledge
base in Asia for optimum exploitation of hydrocarbons, for expansion
and modernization of refineries, for augmenting regional oil and gas
transportation infrastructure and exchange of information, are
examples of such new opportunities for OPEC. We are confident that
OPEC will utilize these opportunities for betterment of the global
economy (60).
On December 21, 2005, while on a visit to China, the OPEC Conference
President and Secretary General Sheikh Ahmad Fahad Al Ahmad Al-Sabah
emphasized the realities and the necessity for the
institutionalization of the OPEC-China Energy Dialogue. He gave
special attention to the 10 percent rapid economic growth rate of
China as well as China being a huge importer of petroleum and
natural gas. The OPEC President advocated even more substantial
improvements, greater volume, and increasing advancement in
bilateral investment and international trade relations between China
and several Member Countries of OPEC.
The Africa and the Middle East Area minerals production, global
demand, and combination encompass the full-scale acceleration of
industrialization, and the supra-maximization of combination in the
achievement of global management.
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*Adjunct Professor of Management, New
York University School of Continuing and Professional Studies, New
York.
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