The Oligarchs Go On Safari.(Business)(Russian and Chinese businesses trade with Africa)

Byline: Owen Matthews; With Karen MacGregor In Durban

Russians take their place alongside the Chinese in a battle for resources to fuel their growing empires.

Late on a Friday night at the Simba Saloon in downtown Nairobi, music by the Kenyan pop sensation the Boomba Clan is playing, and the ties are coming off. At the bar, banker types in expensive suits swap news of the latest bank IPOs and mineral concessions, the must-have gossip in Africa's biggest boomtown. Some of the conversations are in English. Some are in Chinese. And increasingly, many of them are in Russian, as Moscow begins to give both the West and Beijing a run for their money in the race for Africa's riches.

Today, emerging-market giants are fighting for oil, gas and metal ore in Africa as energetically as 19th-century European colonialists grabbed land on the continent. Recently, the Chinese have been the most aggressive, with more than 700 companies active in 50 countries, according to Standard Bank of South Africa. China is now Africa's second largest aid donor and trading partner, behind the United States, with trade up fourfold to $40 billion since 2000. But Russia, the second most active emerging-market power in the area, is gaining. While trade with Africa is only $3 billion a year (up threefold since 2000), Russian companies flush with cash have sunk over $5 billion into buying up African assets since 2000 -- and that's not counting $3.5 billion of oil exploration deals that will come online before the end of the decade. China, meanwhile, has put $6.64 billion into Africa over the same period, a large part of it through the China Development Bank -- but much of that money has been sunk into infrastructure projects like telecommunications, electric power, water conservancy, transportation, agriculture more properly described as development aid. Pushed by the profit motive, and by a Kremlin eager to build economic empires, Russian businessmen are heading south. Africa, like Russia in the early 1990s, is full of basket-case economies with great mineral wealth -- and the Russians reckon they know how to deal with those conditions.

Russia has strongly encouraged its companies to buy assets around the world because it suits President Vladimir Putin's philosophy of restoring his country's international position. Recent energy deals in Algeria have gone hand in hand with $4 billion in arms sales from Moscow. Russian businesses interested in South Africa have gotten a boost from a deal Putin made with President Thabo Mbeki to expand nuclear cooperation. Last September Putin made a whistle-stop tour of Africa, with several top Russian oligarchs in tow -- including Viktor Vekselberg, who pledged to invest $2 billion in metal and mining projects in Africa, adding to holdings that include vast Kalahari manganese reserves he has owned since 2004. "I want to see Russia regaining its close partnership with Africa," Putin said, waxing lyrical about Soviet influence on the continent.

While the Chinese are staking ground in Africa mainly to power their burgeoning cities and manufacturing sector, Russians see the deals differently. Russia is the world's largest energy exporter, and has plenty of its own metals and minerals. But rich Russian companies want to extend their global reach while they have the money, and with oil topping $80 a barrel in recent weeks, the time is now. There's another motive too, analysts say: moving empires beyond the reach of the Kremlin serves as insurance against future political changes in Russia.

Over the last three years, four top Russian metal companies -- Norilsk Nickel, Rusal, Renova and Alrosa -- have invested more than $5 billion in sub-Saharan Africa alone. Russian oil giants Lukoil, Rosneft and Stroytransgaz have signed major ...