Business deals between companies headquartered at opposite ends of the earth have become the rule, rather than the exception. These deals may make headlines for their magnitude, but not for their intercontinental nature. But recently, two such deals caught this writer’s attention. Though they received little coverage in the press, these deals exemplify the benefits of poverty reduction and development not only in countries experiencing development, but also in developed and undeveloped countries alike.

Both deals concern Zijin Mining Group Co., a Chinese firm, which late last month purchased large shares of two mines owned by Canadian firms. According to Bloomberg, Zijin bought a 50 percent share of the Porgera mine in Papua New Guinea from Toronto-based Barrick Gold Corp. and a 49.5 percent share of Kamoa mine in the Democratic Republic of the Congo from Vancouver-based Ivanhoe Mines Ltd. These deals infuse Canadian physical capital with Chinese financial capital, all while helping Papua New Guinea and the DR Congo grow their exports.

For Barrick and Ivanhoe, these deals amount to a crucial injection of capital. Both companies have faced financial difficulties recently: Barrick aims cut $3 billion of its $10 billion net debt by year’s end, while Ivanhoe declared bankruptcy at the beginning of this month after negotiations with creditors fell through. Both firms are expected to pursue expanded mining partnerships with Zijin in the coming years, so as to keep themselves solvent. For Western firms like Barrick and Ivanhoe, capital-rich corporations based in the developing world represent invaluable allies as global competition grows stiffer.

For Zijin, these deals not only offer a chance to get some cash off its hands, they also represent the culmination of decades-long poverty reduction efforts in China. Fifty years ago, a business like Zijin would have been unthinkable in China or any other low-development country; had China been a capitalist economy, foreign firms would have likely dominated its primary sector. But as China’s domestic industrial capacity grew, poverty rates in China plummeted. Firms like Zijin have turned poor countries into middle-income countries. Now, these countries are poised for a new stage of development as domestic firms go global by partnering with Western businesses.

Last but not least, these deals symbolize an opportunity for development and poverty reduction in Papua New Guinea and the Congo, where the mines in question are located. By aiding struggling Western firms, Zijin ensures that locals will remain employed and that transit infrastructure is well maintained. Employment and infrastructure are not only useful in and of themselves, they also give other businesses a chance to proliferate and make poverty reduction efforts simpler. Furthermore, these deals underscore what happens when a country outgrows its poverty—it begins trading intensively with other countries, many of which it helps to develop in the process.

Zijin, Barrick and Ivanhoe are not household names, and may never become household names. Nevertheless, these three firms exemplify how poverty reduction pays dividends for developed countries, developing countries and countries that have yet to develop. American firms take heed, partnerships with companies in the developing world help all countries, not just your bottom line.

– Leo Zucker

Sources: Barron’s Asia, Bloomberg, Financial Times, The Globe and Mail, The Northern Miner, The Wall Street Journal, Yahoo! Finance
Photo: Demanjo

When thinking about helping the world’s poor, your first thought might not involve corporations, investment firms and business analysts. The employees of Investec Asset Management are not just business people—they believe they have a responsibility to society as a whole.

Investec Asset Management kicked off in South Africa in 1991, where the small start-up quickly expanded to an international business, delivering investment products and services to institutions, advisory clients and individuals all over the world. It manages up to $117 billion for its global clients. It currently employs around 6,000 people and considers its headquarters in South Africa, the United Kingdom, Australia and Ireland. It also has banking operations in Switzerland, Mauritius, Guernsey, Hong Kong, Jersey, Namibia, Botswana, Canada, Taiwan and the United States. Needless to say, Investec Asset Management is making its mark on a lot of places.

“As long-term asset managers, we are deeply aware of our broader responsibility to society,” states the website. “We seek to make a positive impact by focusing on initiatives that support local communities and their environments, thereby contributing to the success of future generations.” One recent example of an initiative is its partnership with the sports and education charity, which helps children in the city of Kayamandi.

It’s also partnered with a project called “ProMaths,” which helps children in more disadvantaged regions of South Africa improve their math and science skills. This initiative has proved to be such a success that it was awarded the Mail & Guardian Investing In The Future STEM award. Another initiative is the “Tusk Conservation Awards.” In partnership with Tusk Trust, the awards celebrate those who have worked hard to conserve animals and their environment.

Investec Asset Management believes that we are a global market and must be more aware of global opportunities. It is working with 1,100 charities to help improve the world’s weaknesses.

– Melissa Binns

Sources: Investec Asset Management, Mail & Guardian
Photo: Flickr

The United Arab Emirates (UAE) is composed of the seven emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah and Fujairah. Located in the southern half of the Arabian Peninsula, it occupies over 83,000 square kilometers and boasts a population of 9 million.

In comparison to the rest of the world, the country is relatively young. It gained independence from the United Kingdom in 1971. The discovery of oil reserves in the 1960s catapulted the once impoverished region into a center of international business and wealth. Today, the UAE is the eighth richest country in the world.

The UAE’s political structure is both traditional and modern in its approach. Each emirate is led by an emir or ruler who oversees the internal political affairs of the region. Representatives from each emirate are chosen to form the Federal National Council. The President and vice president also serve as emirs of Abu Dhabi and Dubai, respectively.

Prior to its entry into the global oil industry, the UAE’s revenues mainly stemmed from its failing pearl and fishing industry. Today, over 90 % of Emirati are literate, due to extensive investments in education, healthcare and infrastructure.

The UAE currently rates 23 out of 189 countries for ease of doing business. Its positive relationships with foreign investors have allowed the country to successfully compete in the global marketplace and exposed its citizens to the level of globalization necessary to conduct international business.

Success has also visited the neighboring countries of Iran, Qatar, Oman and Saudi Arabia as organizations continue to promote the importance and healthcare in the region.

– Jasmine D. Smith

Sources: CIA World Factbook, BBC, Doing Business
Photo: Win Wallpapers