Zimbabwe Signs Mining And Power Deals With China

Zimbabwe signs mining and power deals with China

15th June 2006

Dumisani Muleya, Business Day

STATE-owned Zimbabwean businesses signed a raft of energy, mining and farming deals worth billions of dollars with Chinese companies, Zimbabwean Vice-President Joyce Mujuru announced this week.

The agreements highlight Zimbabwe's dogged campaign to lure Chinese investors under its Look East investment policy, to replace western capital which has been withdrawn or reduced due to the political and economic crisis.

The largest deal announced was with China Machine-Building International Corporation. The company signed a $1,3bn agreement to mine coal and build thermal-power generators in Zimbabwe.

Designed to reduce Zimbabwe's electricity shortage, the deal was signed by representatives of Ele Resources, a local mining company.

A memorandum of understanding signed by the parties aims to set up a joint-venture coal mine in Dande in the Zambezi Valley and two power plants in the area.

The Chinese firm has built thermal-power stations in Nigeria and Sudan, and has been involved in mining projects in Gabon.

Xie Biao, president of the Chinese corporation, said his firm would help Zimbabwe to recover from its energy crunch.

"We believe we can play a great role in the power sector in Zimbabwe," he said.

Mujuru, who was in China last week on a working visit with government ministers, said that power shortages were hurting the country's economy.

A further deal between the Zimbabwe Mining Development and China's Star Communications will see the groups forming a joint venture to mine chrome, with funding from the China Development Bank.

The country will also import road-building, irrigation and farming equipment from the China National Construction and Agricultural Machinery Import and Export Corporation and China Poly Group.

Zimbabwe relies on China for imports of telecommunications equipment, military hardware and many other critical items it can no longer import from the west.

Wankie Colliery, the JSE-listed company located near Hwange, also signed an agreement with the Chinese company to establish a coal mine and a power station in Zimbabwe.

During her official tour, Mujuru visited China National Aerotechnology Import and Export Corporation headquarters for talks with senior executives of the group.

The company has been supplying Zimbabwe with passenger and military planes, scanning machines and electricity transmission equipment.

Several delegations of Chinese officials and businessmen have made forays to Harare to set up ties. Zimbabwe's police have a dedicated "China desk" to protect Chinese interests in the country.

Mujuru said Harare would continue to use its mineral resources to attract investors from China, as well as from other parts of the world.

The crisis-ridden country has of late been mortgaging its minerals for credit from foreign banks to pay for critical imports.

Zimbabwe has a wide variety of precious minerals including platinum, gold, coal, nickel and diamonds. It also has unverified quantities of uranium.

Two weeks ago, the country signed a revolving $50m deal with a French bank to import fuel. Bindura Nickel Corporation used its mineral resources as a guarantee.

Nyasha Makuvise, the CEO of Zimbabwe's Absa-controlled Jewel Bank, said coal mining and power projects were needed urgently to deal with the continuing power outages.