Thread: China offers Zimbabwe $3bn for platinum reserves

China offers Zimbabwe $3bn for platinum reserves: Report
Saturday, 05 February 2011

HARARE: China has offered Zimbabwe $3bn for vast platinum reserves, a local private newspaper reported yesterday but said the deal was likely to be rejected by the government over its terms.

Zimbabwe, with an estimated $6bn yearly economy, has the world’s second largest platinum reserves after South Africa. It has relied heavily on Chinese investment to prop up a staggering economy largely shunned by the West over President Robert Mugabe’s suspected human rights abuses.

Quoting sources in Zimbabwe’s unity government, the weekly Zimbabwe Independent said the master-loan-facility from the Export-Import Bank of China would give the southern African country money to revive an economy wrecked by what many see as chronic mismanagement by Mugabe’s ZANU-PF party.

“Sources said the deal has been received with scepticism in government circles because it has stringent conditions,” it said, citing these as “mortgaging platinum reserves, ceding Chiadzwa (state) diamond revenues and tollgate fees.”

Finance Minister Tendai Biti reportedly told the Independent talks were going on with the Chinese, but declined to discuss details. Biti and Mines Minister Obert Mpofu were unavailable for comment. Chinese officials were also not available for comment.

On Monday, Economic Planning and Development Minister Tapiwa Mashakada told Reuters the state-run China Development Bank could fund up to $10bn in Chinese investment in Zimbabwe’s mining and agriculture sector.

The announcement could be aimed at trying to prod Western investors to sink more money into Zimbabwe out of fear they will lose ground to China, analysts said.

Western investors, already cautious of doing business with Zimbabwe due it its precarious political position, are also worried about a law that says 51 percent of firms worth over $500,000 should be owned by black Zimbabweans.

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Chinese trade diplomacy is becoming a legend.

The next step is likely to be to threaten withdrawal from the Zimbabwe market completely thereby leaving the economy in total ruin...unless they agree to even worse terms than those currently on offer.

^A chinese withdrawal would be good thing for Zimbabwe, given the the primary effect of chinese involvement in africa has been to roll back the improvements made in good governance, transparence and accountability in government that were made in the 90's and early 2000's.

I find the idea that junta's and dictators around the world have been and are still able to sell off national resources for a pittance and take out massive loans to finance the repression of the local population and fiance the lifestyle of an illegitimate political and business elite. And then after the locals have finally got rid of these people they are saddled with living with these unfavourable contracts and loan repayments.

The world would be a better place if contracts signed by illegitimate governments were internationally seen as being purely between the individuals who sign the contracts and that any future legitimate government would have no duty to honour the contracts. It would massively increase the long term business risks to those amoral and greedy enough to do business with these governments. it would make it much harder for the Burmese junta who seem to be surviving reasonably well off chinese, thai, Malaysian, indian and Singaporean investments and services.

I like the idea of those who loan money to the mugabe's government having to chase his private wealth, when zarnu finally loose their gip on power and legitimate government comes in.

Its never going to happen because the financial consequences to the banks and international businesses of the chinese, russians, brits, french, Singaporeans, australians, canadians, indians and americans would be just to painful.