25 May 2018

Zimbabwe: Parastatal Partners Dubious Chinese Firm, Claimed $100m Investment Fails to Materialise

Photo: The Herald
The Kamativi mine

THE State-owned Zimbabwe Mining Development Cooperation (ZMDC) partnered a Chinese company despite Beijing refusing to endorse the deal citing concerns about the investor, parliament heard on Monday.

The Chinese investor, Beijing Pinchang, had in 2015 pledged $100 million for the revival of Kamativi tin mine but it later emerged that the foreign partner did not have the funds.

Representatives of the company told legislators that they invested $7 million in the project but ZMDC management disputed the claim saying the foreign partner only procured $1 million worth of equipment which also turned out to be unsuitable for the mining operations.

Even so, and three years later, ZMDC has still not cancelled the agreement.

Board member Crispen Chitambira told parliament's mines committee that the board had initially disapproved the investor after a negative due diligence report from a trip undertaken by the parastatal's managers.

According to Chitambira, even the Chinese embassy in Harare refused to endorse one of their own, but ZMDC management later made a U-turn.

They appealed with their board to reconsider its position, citing challenges in securing an alternative investor.

Scandalous deal

Chitambira added that the board conceded on condition that Beijing Pingchang met the conditions of the agreement.

However, since the signing of the agreement in 2015, Beijing Pinchang has changed its funding partner three times--raising parliamentary queries over whether the project will ever take off.

Last week legislators requested to be furnished with evidence of financial standing from the Reserve Bank of Zimbabwe to prove the investor had the required funding.

Appearing again before the legislative committee, ZMDC general manager Luke Akimo claimed that the Chinese investor had failed show proof of funding.

Led by Temba Mliswa, MPs quizzed ZMDC on why the agreement still stands and challenged the board on why they have not retired after taking part "in such a scandalous deal".

Akimo said ZMDC had taken a position to give the investor a 10-day window to rectify his shortcomings, in line with the procedures of termination the agreement--ailing which the deal would be cancelled.

However, company secretary Tinashe Chiparo also told legislators that ZMDC's legal department raised red flags and showed managers opportunities to terminate the unproductive agreement several times, but no one took heed.

The committee also heard that the board met about 10 times to discuss a way out.

According to another board member, Esther Maravanyika, board members are paid $316 per seating by four times per year and a $650 retention allowance per month.

Mliswa did not give Beijing Pinchang chief representative Shouming Lin a second opportunity to respond despite the latter's attempt to do so after his first appearance last week.

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