ICYMI: Zimbabwe’s President Mugabe confirms use of minerals as collateral in arms deal with China

ICYMI: Zimbabwe’s President Mugabe confirms use of minerals as collateral in arms deal with China

HARARE, Feb 22 (The Source) – President Robert Mugabe has, for the first time, gone public with some details of an arms-for-minerals deal his government entered with China a few years ago.

Speaking during his 93rd birthday interview aired on state television on Monday night, Mugabe revealed he had met his Chinese counterpart, Xi Xinping, in Beijing on January 9 to discuss the deal, among other issues.

“They (Zimbabwe’s military) felt I should raise the issue (relating to) the platinum claim they gave to a Chinese company to exploit so the money therefrom can be used to secure and pay the debt which they have (arising from) arms procured from China,” Mugabe said, when asked about the January meeting with Xi.

There has been speculation about the Zimbabwe military’s deals with China, whose influence in Harare has grown since the early 2000s when the West imposed military and economic embargoes in protest over mounting rights abuses and allegations of electoral fraud.

On May 6, 2014, Chinese embassy economic and commercial counselor Han Bing told The Source that Beijing wanted Zimbabwe to use its mineral proceeds to guarantee any future loans after finance minister, Patrick Chinamasa admitted that China was apprehensive about extending financial aid to the debt-ridden southern African nation.

The use of minerals as collateral was already an accepted principle, Han said then.

However, Mugabe’s government has, until now, refused to comment on reports that it was mortgaging the country’s mineral wealth to secure arms from China.

His comments also follow the high-profile collapse of Anjin, a diamond mining partnership between Anhui Foreign Economic Construction Company Ltd of China (AFECC) and Matt Bronze, an investment vehicle controlled by Zimbabwe’s military.

The Zimbabwe government took over total control of all Marange diamond operations — throwing out its erstwhile partners — in a move it said was meant to consolidate the sector and improve transparency and accountability. A report by the private Zimbabwe Independent said the military had received $78 million from Anjin between 2011, at the start of the firm’s diamond sales, and 2014.

Although Mugabe did not reveal the name of the Chinese firm he referred to, the state-owned Zimbabwe Mining Development Corporation (ZMDC) has two platinum mining joint ventures with the Chinese.

In 2006, the ZMDC announced it had set up Global Platinum Resources in partnership with arms manufacturer China North Industries Group Corporation (Norinco), handing over platinum concessions seized from Impala Platinum’s Zimplats. ZMDC also has a platinum joint venture with Chinese firm Shin Zim.

But it is the partnership with Norinco which has, in the past, been accused of quarterbacking China’s arms-for-resources deals with Iraq, during Saddam Hussein’s rule, and lately, with South Sudan, that appears significant.

It is not known how much the arms Zimbabwe has imported from China are worth. In 2008, an arms shipment for Zimbabwe was turned away by unionists at a South African port.

In 2009, the Airforce of Zimbabwe bought a fleet of K-8 trainer jets, which reports at the time claimed as worth $240 million.

This week, a Parliamentary Committee on Defence, Home Affairs and Security reported that the Airforce of Zimbabwe was $61 million in debt.

Global Platinum Resources, which ZMDC says is still at the pre-feasibility stage, more than a decade after the joint venture was born, recently drew fire from an impatient Walter Chidhakwa, Zimbabwe’s mines minister.
Chidhakwa told The Source in a September 24 interview that he had summoned the firm’s representatives to explain the delay in launching operations, for which they had been licenced in 2011.

“They are supposed to brief me where they are because the statement I have made is we will not tolerate people who sit on claims,” Chidhakwa told The Source in the 2014 interview.

“So they have indicated a desire to come and see me and tell me (where they are), so I’m waiting for them to come and see me and tell me where they are and what they intend to do.”

In his ZTV interview, Mugabe did hint at Harare’s frustrations with Beijing’s reluctance to implement projects, but admitted that Zimbabwe’s inability to pay for past loans was a major stumbling block to deeper economic co-operation. Zimbabwe owes China close to $1 billion.

In response to a question on why China seemed to invest more in other African countries than in Zimbabwe, which professes to having a special relationship with the Asian giant, Mugabe said: “I don’t know what they are giving other countries but it depends on our capacity not only to absorb the funding, but to ensure also that we repay what we should repay.”

“Some of the funds are not gratuitous, they are not grants. They are debts, loans that are being extended to us and we should be able to repay or start repaying them. When we fail to do so then our friends say ah, but what is happening?”

Zimbabwe’s commercial ties with China came under strain in 2016 when the government seized diamond mining concessions from seven firms operating there, including the Chinese-run Anjin and Jinan mines.

Although China has gained a foothold in Zimbabwe’s retail sector, the country’s significant investments have been in infrastructure.

China’s Sino Hydro is currently working on expanding Zimbabwe’s 750 megawatt Kariba South power plant, putting up $320 million to add 300MW in a project valued at $533 million. Sino Hydro has also been awarded a contract to add 600MW to the 920MW Hwange thermal power plant for an estimated $1.3 billion.

China has also built a $100 million defence college on the outskirts of Harare and recently completed the $150 million upgrade of the Victoria Falls International Airport.