China, Zim clash over diamonds

Source: China, Zim clash over diamonds – The Zimbabwe Independent June 3, 2016

A DIPLOMATIC row has erupted between Zimbabwe and China, the troubled Southern African country’s all-weather friend, as it emerged this week that Beijing is miffed by Harare’s decision to boot out Chinese companies from the lucrative Chiadzwa diamond fields early this year.

By Chris Muronzi

This comes after Mines minister Walter Chidhakwa in February cancelled special grants of companies operating in Chiadzwa on the pretext they had expired. Anjin has since taken government to the courts, challenging the legality of Chidhakwa’s decision.

Diplomatic sources told the Independent this week that relations between Harare and Beijing have become frosty after Chidhakwa cancelled the company’s Special Grant.

In High Court papers, Anjin’s director Zhang Shibin challenged the order, saying it violated Clause 8 of the special grant No. 4765, which provided that the Chinese company would continue to mine as long as is feasible provided inspection fees were paid as provided for in the Mines and Mineral Act Chapter 21:05.

“The first respondent clearly had no regard to this provision of the Special Grant when he issued his notice on February 22 2016. The afore said clause there clearly specified that the applicant would be entitled to mine the area as long as it was feasible to do so. That provision was incorporated by the secretary for mines in the Special Grant,” the court papers say.

The diplomatic tiff could further isolate Zimbabwe which is in the process of restoring relations with the international community after years of being ostracised for its chaotic seizure of white-owned commercial farms and past elections deemed not to be free and fair, which were characterised by political violence.

The same sources said China will not follow through with earlier plans to fund multi-billion dollar energy and infrastructure deals signed by President Robert Mugabe in 2014 and 2015.

Already China had set stringent requirements for supporting the deal, insisting on the bankability of the projects.

The sources said the latest attacks on property rights had cast further doubt on China’s commitment.

It is understood Anjin shareholders have met with the Chinese government officials to express their grievances and feel that there is no respect for property rights.

“The shareholders of Anjin have lobbied their government at the highest levels to relook at Zimbabwe in light of the Anjin and Jinan problems at the hands of Chidhakwa,” said one diplomatic source. The source added that Anjin, which is also in a joint venture in Jinan with the Zimbabwe Mining Development Corporation, is relooking at its mining interests in the country after sinking more than US$300 million in diamond mining.

“They are not going to fund any new projects but will continue with projects they had already committed such as Hwange thermal and all other that were already in the implementation stage. They feel that Zimbabwe is an unsafe investment destination,” the source said this week.

Anjin says it has invested US$100 million since 2010.

“Applicant has invested substantial funds, effort and time since 2010 in establishing its operations at the mining sites as a result of the rights granted in terms of the Special Grant. More than US$100 000 000.00 (One hundred million United States dollars) in the plant and equipment, technology transfer and specialised skills development, infrastructure corporate social responsibility programmes and thousands of jobs have been created as a result of the applicant’s investment in the mining area,” the company said in court papers.

“…the summary cancellation of the Grants has jeopardised the applicant’s operations and resulted in significant financial harm.”

As of 2014, China had advanced more than US$1 billion in concessionary and preferential loans to Zimbabwe in addition to US$100 million in grants and interest free loans, according to information provided by the Chinese embassy in Harare.