Russia is pursuing costly state oil and platinum projects in Africa despite an economic crisis at home, hoping they will bolster sales, including of arms, for businesses hit by Western sanctions over the conflict in Ukraine.
Moscow has mostly focused on building ties with Asia since the U.S. and European Union sanctions came into force last year, but the Africa deals signal a desire to rebuild what was a big market for its weapons and technology during the Soviet era.
The drive by government-owned industrial giant Rostec, which includes Russia’s monopoly arms exporter in its vast portfolio, is complicated by the economic slowdown, which has strained government finances and forced firms to seek state support.
Lower commodity prices mean non-government Russian investors in Africa in the early 2000s have mostly pulled out, but Rostec says it is on track to build a $4-billion oil refinery in Uganda and a $3-billion platinum project in Zimbabwe. The conglomerate, which controls hundreds of firms ranging from arms exporter Rosoboronexport to the world’s top titanium producer VSMPO-Avisma, sees the projects as a door-opener in Africa, particularly to its fast-growing arms market.
“Apart from proceeds from the project itself, building the crude oil refinery [in Uganda] opens markets for products of all Rostec’s companies and Russian companies as a whole,” Rostec said in a statement to Reuters.
The company and its chief executive, Sergei Chemezov, an ally of President Vladimir Putin, face sanctions over Russia’s annexation of the Crimea region and Western accusations, which Moscow denies, of supplying separatists with weapons and troops.
RT Global Resources, a 100-percent owned Rostec subsidiary, won the contract to build and operate the refinery in February, raising concerns among some Ugandan opposition lawmakers about the selection of a company closely linked to Russian arms exports.