Dumisani Muleya
9 July 2009
FURTHER details have emerged over Zimbabwe's controversial platinum deals and credit facilities with China which have now provoked a storm in government as the main political leaders fight to claim glory for the funding.
Official sources said this week that Zimbabwe and China recently signed a cautioned Memorandum of Understanding (MoU) with the Eximbank of China over the existing US$200 million deal connected to the anticipated US$5 billion platinum mining deal between the two governments.
The US$5 billion figure came out of complex calculations involved after a meeting between Treasury and Reserve Bank of Zimbabwe (RBZ) officials on June 8.
The meeting was attended by Biti himself, his advisor Conrad Nyamurova, and an official in his ministry, Mary Takavarasha, Reserve Bank governor Gideon Gono, his deputy Edward Mashiringwani and Gono's advisor Munyaradzi Kereke.
Minutes of the meeting held at Biti's office on June 8 show that the minister highlighted he had recently signed an MoU with Eximbank as part of efforts to sort out the platinum deal linked to existing credit facilities.
The minutes of the meeting headlined "Zimbabwe-China US$5 billion loan" note the following points:
The minister (Biti) lamented the current format of the platinum-backed loan through Eximbank of China which would heavily prejudice Zimbabwe;
If the deal goes through, the Chinese would get 50% in a mineral resource (platinum) worth at least US$40 billion without paying anything;
Gono agreed with the minister (Biti)'s strong reservations and added that the RBZ had long stood opposed to the deal and;
The minister (Biti) highlighted that recently he signed a cautioned MoU with Eximbank on condition of clear legal documentation and declaration of obligations of the Chinese.
Information gleaned from documents to hand show that Biti recently signed a cautioned MoU with China's Eximbank to pave way for work to begin on the mining concession that was mortgaged and thus encumbered after the negotiation of a US$200 million credit facility with Eximbank. The initial deal was structured on a wrong valuation framework of US$10 per ounce.
Although the platinum concession involved is estimated to be worth US$40 billion, government officials say the deal with China should be at least US$5 billion considering the current platinum prices on the world market.
According to Platinum Today, a web-based publication which claims to be world's leading authority in the platinum group metals, the monthly average price of platinum of late has been between US$1 167 and US$1 168 an ounce. The price was US$1 109 per ounce yesterday.
A senior government official said yesterday Harare currently wants Beijing to contribute at least US$5 billion in the platinum deal.
"If Zimbabwe and China took the lowest possible price of platinum per ounce of say US$1 000 an ounce in view of the fact that there are 30 million ounces of platinum in the concession, the real value of the deal would be US$30 billion," the official said. "If you take the current market prices it goes up to US$40 billion.
This means that if the Chinese were to get 50% of the equity as initially agreed, they should pay between US$15 billion and US$20 billion. However, we think US$5 billion is a reasonable figure and that is what we are working with."
Despite Biti's feverish denials, government is engaged with the Chinese over the massive platinum deal and credit facilities, including the US$950 million deal that is currently on the table. The US$950 million negotiated under China's buyers credit facility is almost a done deal although there are a few issues which need to be finalised.
Sources said Zimbabwe first needs to clear its US$30 million arrears to the Chinese and pay a deposit of 10% of US$950 million - US$95 million - and thus a total of US$125 million before the money comes. However, the conditions could be waived. The issue is still under negotiation.
Biti signed an MoU with Eximbank to free the platinum concession which was mortgaged in 2006 when Zimbabwe signed a US$200 million facility with the bank.
The deal dates back to events starting in 2006. It involved the Zimbabwe Mining Development Corporation (ZMDC) and a Chinese company, Wanbao Mining, for the development of platinum in a concession known as Selous and Northfields reserves covering 110 square kilometres.
ZMDC represented the Zimbabwean government and Wanbao the Chinese.
Zimbabwe has huge platinum deposits. South Africa is currently the leading world platinum producer, followed by Russia.
However, when Zimbabwe in 2006 negotiated a US$200 million facility with Eximbank, the Selous and Northfields reserves were put up as collateral.
This left the concession encumbered and the mining deal was stalled for a while. Biti has now signed the MoU to extricate the concession and allow for the mining upon finalisation of "legal documentation and declaration of the obligations of the Chinese".
The Chinese development assistance has been in the form of concessional loans, export credit (including buyer's and seller's credit) and grants.
Zimbabwe has benefited from a buyer's credit loan from China. In August 2006, China extended a US$200 million buyer's credit loan facility to Zimbabwe for the procurement of fertilisers, agrochemicals, agriculture equipment and tools, irrigation and other equipment and animal health products.
The terms of the agreement include: the value of the commercial contract should be more than US$2 million.
The portion of the Chinese content of exported goods should be no less than 50% of the total value.
The cash payment (down payment) made by the importer to the Chinese exporter should not be less than 15% of the total contract value or 20% in the case of ship export contract.
The export buyer's credit provided by the Eximbank of China for an export project of goods or services shall not exceed 85% of the total contract value, and 80% in the case of a ship export contract.
Biti has been trying to sort this issue out in relation to the platinum deal.
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So china lends Zim 5 billion and China gets 40 billion worth of platinum for nothing with that 5 billion still having to be repayed so china has 45 billion in the end plus interest. Bad deal if i've ever seen one. If zim can get 40 billion worth of platinum ( 50%) out of the ground so why do we need this 5 billion from china. Instead of being a western economic colony we will be an eastern economic colony. The western banks have forgiven many billion debts in africa and do you think the chinks or japs going to be so forgiving, noway in hell. Let Zim work its way out of the ground under a decent government who won't steal from the people and tell the eastern thieves to go hell or go and hang.
No doubt Comrades Ndebvu, Mabhiza, Akapfunde et al will dismiss this story as racist propaganda; however, since this is a bank deal (as confirmed by the Chinese government) and is on strictly commercial terms, the story makes sense.
The questions are- (a) Are the 30 million ounces of platinum real? and (b) who carries the financial risk?
If 30 million ounces are merely an exploration target, which has to be proved through drilling, and then developed into a mine, at the entire risk of the Chinese bank putting up the $950 m / $5 billion; then maybe its ok.
On the other hand, if the 30 million ounces have been proved to exist and/or the credit line is drawn at the entire risk of the Zimbabwean taxpayer (which appears to be the case) then this is the biggest rort since the Rudd Concession and Zimbabwe should reject it out of hand.
China is right! God-ordained criminal Mugabe is right! Both are right indeed.
AK47, Mahbiza, Richerson88 & others continue to praise bloodstained Mugabe for his patriotism, nationalism and his empowerment policy.
Mugabe has destroyed the country over his 29 years of misrule, but his thugs and bootlickers however continue to consider him as a great statesman.
Tyrant Mugabe is right. he needs the money to celebrate his birthday parties, buy luxurious apartments to his children and bribe the judiciary and the army so he can stay in power.
Mugabe is right to sell the country to the Chinese, because his thugs want him to continue to protect them from being accountable for their crimes against ordinary Zimbos.
There is no price to Mugabe's safety. he is right. His people love him that way.
Where are the apologists for Bloodstained Bob and his ZANU-PF henchmen? Why won't they defend this latest travesty as a "victory" for the "enlightened" guidance of their "Dear Leader's" "Look East" policy?
What? Does somehow "Look East" look less promising than it once did? Are the Chinese suddenly less "good friends" now that they insist on obtaining Zimbabwe's future mineral resources for their current "aid"? What about the position that China is a better "friend" to Zimbabwe than the "West", "because they DO NOT ATTACH STRINGS TO THEIR AID"? What do you think Tak?
The silence is deafening, they attempt to defend the indefensible, yet fall silent when their own leader sells out his own nation for a "bag of silver" to maintain his position of power because everyone else in the world know not to give a farthing to a thief!
This latest episode is the tip of the iceberg. To those that truly think that China is Zimbabwe's friend, then look again at the deal that is on the table. Is Zimbabwe really getting a good deal? How much is the platinum concession worth? How is it "linked" to the "aid" the Chinese are willing to provide Zimbabwe with? Is it "aid" or is it a bribe to ZANU-PF for them to open the door to Chinese (instead of "Western") exploitation?
Does Zimbabwe want to be a colony of the East in order to avoid becoming a colony of the "West"?
Or maybe they do not care how badly Zimbabwe does in this proposed deal as long as China extends them credit to continue to buy Kalishnikovs and condos in Hong Kong?
"Look East!" to where Zimbabwe's future riches are soon to be relocated!
But it IS strange, that none of the usual suspects (AK47, Tak, J-hollow, Mabhiza, et al) are not on this thread to defend what appears on the surface to be trading one master for another...........
"Total Empowerment!" As long as ZANU-PF is not selling out Zimbabwe's future to China in a headstrong effort to appear NOT to be kowtowing to the horrible, imperialist, "West"!
"Look East!"
"All Quiet on the Eastern Front" - how predictable!
Once again Katz, the facts and the tides of history are against our sycophantic ZANU-PF comrades on this board. You won't find them here.......... facts are NOT their forte................. a good example of this is the Herald............
The FACTS show that dealing with the "East" is at least as fraught with peril for Zimbabwe as dealing with the "West".
The people of Zimbabwe need to obtain what the promise of Zimbabwe once was. There is no requirement that Zimbabwe look "East" OR look "West", but to protect their long-term interests - like feeding the country, providing clean water, open hospitals and open schools. I only hope that Zimbabwe doesn't sell out it's future for the sake of one particular political party's desire to retain power.
But again, "We" (in the real world) don't expect our adversaries here to respond with facts, only invective and slight-of-hand tricks to make sure no one "pays attention to the MAN behind the curtain"......
I judge ZANU-PF/Mugabe by what they have promised and failed to deliver - not why they have failed to deliver on their promises. If a party was serious about what they promised the people, they would deliver, ZANU-PF/Mugabe has NOT! If Zimbabwe was not such a black hole on the face of the earth I probably would never have cared about it - but Zimbabwe has the great promise of it's past and the potential for so much greater things for ALL of it's people - which is what makes the past 18 months all the more sickening for many of us.
"Total Empowerment!" - ZANU-PF "PROMISED" "Total Empowerment!" last year, remember? They promised it, have they delivered it to the people of Zimbabwe? Is Zimbabwe NOW "Totally Empowered!"?
The silence is deafening..................
Juhlman - the tragedy of Zimbabwe is all the more heartbreaking because the people (black, white, asian, mixed race - everyone) deserve better after decades of criminally inept and cruel leadership.Going right back to the racist and myopic leadership of the Rhodesian Front whose stupidity and vanity lead the country into a war that cost at least 40,000 lives; only to be followed by the tyranny of Mugabe whose own greed and vanity has cost the country at least as many again. Surely, it is time that the people had better leaders.
This tragedy is compounded by the fact that Africa as whole MUST URGENTLY change the ways of the past, if it is not to become totally irrelevant. Mugabe represents the past and not the future; but as long as he is still in power, his populist appeal will divert Africa from what it must do. The damage that this tyrant is doing will be paid for by generations of Africans whose leaders will fail them, time and time again, in the cause of personal enrichment. One can only hope and pray that President Obama's message over the week-end gets through to enough people of vision and influence.
See all comments (19).
So....... for you ZANU-PF apologists who think China is Zimbabwe's "fast friend" who will give them money "without strings" unlike the imperialist "West"......
What sort of friends are the Chinese now? I said it before, you may hate the "West", but your far more likely to be treated fairly by the "West" than you will by the Chinese - they play hardball..... NOTHING is free..... friends or not ..... and now you see the actual results of dealing with them.
Makes you wonder how much else of Zimbabwe ZANU-PF have given away to China and at what price, to keep themselves in power. What hollow garbage ZANU's and Bob's claim of "defending the liberation" are when you look at what they're selling out to the Chinese.
"Look East!" to where Zimbabwe's riches will be further drained out of ZANU-PF's desperation to remain in power!
"Total Empowerment!"