China wants Zimbabwe’s mineral proceeds as collateral for loans

via EXCLUSIVE – China wants Zim mineral proceeds as collateral for loans – official | The Source May 6, 2014 By Bernard Mpofu

China wants Zimbabwe to use its mineral proceeds to guarantee any future loans, a Chinese official said on Tuesday, adding that Beijing had already extended nearly $1,5 billion in the last three years to Harare’s ailing economy.

In February, Finance Minister Patrick Chinamasa said the two countries were negotiating what he termed a comprehensive financial rescue package.

However, the minister has recently admitted that China, among other potential donors and investors, remain apprehensive about extending financial aid to debt-ridden Zimbabwe.

Outgoing Chinese embassy economic and commercial counselor Han Bing told The Source in an exclusive interview that the China Import and Export Bank and officials from the ministry of finance  were working on technical details of the arrangement.

“We are discussing whether we can take proceeds of sales for some minerals as collateral for the loans,” said Han.

“The bank and the team from the ministry of finance are now working at a technical level on how they can set up such a mechanism, how much the collateral would be and how much loans they (Zimbabwe government) can get.”

In principle, the funding request and use of minerals as collateral has already been accepted, Han added.

He said Chinese loans to Zimbabwe were nearly $1,5 billion over the last three years – about 37 percent of the 2014 national budget at $4,1 billion – and that it was now burdensome for the government to repay.

However, Zimbabwe has indicated in the 2014 budget data that it owes China over $430 million.

About 96 percent of Zimbabwe’s budget goes towards recurrent expenditure, and Chinamasa has said government has no capacity to repay its foreign debt of about $10 billion.

The economy has slowed down since President Robert Mugabe and his ZANU-PF party won the elections last year, ending a unity government with the opposition MDC which had helped stabilise the economy.

Last year, Zimbabwe earned $1,97 billion from mineral exports, making about 64 percent of foreign currency earnings.

“We are asking for collateral because it’s in accordance with rules and regulations when granting any loan, but it doesn’t mean that we will use the collateral. This is the concept that we are now discussing with the Zimbabwe government,” said Han.

On Monday, mines minister Walter Chidhakwa said the new Mining Promotion Corporation would be key in identifying mineral deposits which will be used for securitization of loans and in negotiating joint ventures between government local and foreign investors.

Commenting on bilateral investments,  Han said Chinese inflows have grown from $35 million in 2010, to $460 million in 2011 and $600 million last year.

He said while China does not oppose the country’s indigenisation regulations – which compels foreign owned companies to cede 51 percent shares to local blacks – he urged government to have a consistent policy environment, citing a ban on the exports of raw chrome as an intervention that spooked investors.

“What is really harming the investor is the inconsistency in policy. When investors enter the market they make their decisions based on the existing policy. I didn’t see any companies close because of the indigenisation policy but I have seen companies close because of the change in policy,” Han said.

Chinese investments in mining and agriculture are yet to break-even in three years, he added.

 

COMMENTS

WORDPRESS: 17
  • comment-avatar
    John Thomas 6 years ago

    They are trying to get the Chinese money, then they will stuff them. Be very interesting to see how the Chinese handle this and who actually gets stuffed.

  • comment-avatar
    Roving Ambassador 6 years ago

    Oh yes ,they will wait and wait until ZANU is in a panic mode then they will strike.
    Rover and Saab learnt the hard way.The idiots in ZANU are mincemeat to these Chinese. I cry for Zimbabwe.

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    BOB4ever 6 years ago

    LOL Our country Zimbabwe, always begging for everything, money, sympathy…geeez hatife takabuda mu hot water. Now they want to sell off all our minerals to these countries for PAPER!!!!! Really, you let these white creature play us ball. MDC is out of my belief system, that seems like a Zanu PF faction to divert our attention somewhere for false hope and zimbabwe be recognized as a country with more than one political party which is false political practises. well hameno. If i had the resources i would go toe to toe with BOB and MDC…..NO COUNTRY FOR OLD MEN!!!!

  • comment-avatar
    Mlimo 6 years ago

    Stolen raped and pillaged all above ground now zanupf are selling away what’s underground.

  • comment-avatar
    Justice 6 years ago

    Selling the country’s assets to the Chinese for peanuts – Chimbabwe’s future is a province of China!

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    Hee hee e njani njani Lobengula akatengesa nyika for a bag of sugar…chii chii…sovereignity chakuti chakuti…

    Just be honest you have failed quite a lot of generations to come.

    Today who is selling Zimbabwe???

    • comment-avatar
      kutongwa nonjazi 6 years ago

      Wapedza Lucy, future generations and us have been robbed.

  • comment-avatar

    The Chinese will need guarantees before they advance these huge sums of money, guarantees that Zanu will not fall from power any time soon and with the economic situation today it could well happen. The writing is on the wall. The Chinese know any opposition party comes to power all these nefarious deals will be investigated and they will get the boot.

  • comment-avatar
    machakachaka 6 years ago

    We have for a long time not been able to manage our debt well. The problem is that noone wants to lend us money because we don’t pay back. Part of our economic problem is we seem to think friends should give us free money. Bhadharai zvikwereti va Chinamasa, and only then can we be able to borrow again.

  • comment-avatar

    Our kids will not pay for illegimate government. Donation are welcome but loans will not be repaid.

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    moyokumusha 6 years ago

    so we only owe the Chinese 1.5 billion out of our 10 billion debt. I do not believe it is only 430 million as if it was they would be lending more. This means the balance is owed to the west which explains why Bob hates them so much, they are asking for payment and not giving anymore. It also explains why ZPF are after the platinum mines / reserves, Han Bing wants them. Time to change this lot before we loose everything.

  • comment-avatar

    ZANU you are sell outs. You are selling Zim , its people , yourself and your grandchildren to foreigners. Talk about colonialism. ZANU are actually aiding and abetting the colonialists! All for money. So sad.

  • comment-avatar
    Roving Ambassador 6 years ago

    I have seen a video of a Zimbo punching Chinese worker at Injini diamonds. The treasonous malcontents of ZANU are driving the people into a corner. These are the early signs.
    Unfortunately it will turn xenophobic.
    Can some one please verify, rumour is Robert Mhlanga of Mbada passed away in SA.
    No one is talking about it ,seems fishy.

  • comment-avatar
    Petal 6 years ago

    what baffles is in all these nail salons they are run by the chinese who do not employ people from other communities and someone told me that even in the US they do the same trick they claim they are the onese who invented the False Nails so they must have the right to own and run these nail salons while on the other hand they are wiping out the elephant for the ivory and the rhino claiming it is used in their herbal medicines. Even in their restaurants, like the indians they will only employ their people and no one else but their remain untouched by this silly word called “indigenisation” they are allowed to do as they please

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    Wakeup 6 years ago

    lol ok, deal with the chinese, they are worse than westerners. They hate black people to the last bit here in the states and i wonder why bob would even sell our minerals to them. its not our debt, its bob`s debt but all u fools stay scared or an old clown!

  • comment-avatar
    truth 5 years ago

    zimbabwe will b a chinese colony soon

  • comment-avatar
    Tongoona 5 years ago

    We have all been sold to China as slaves. Are these the benefits of our independence? Is this what ZimAsset means–slavery. Zpf murikutamba nemoto pamwechete nemaChaina enyu.