Chinese Interest in Zimbabwe By Eddie Cross

[Nat Quinn]

Chinese Interest in Zimbabwe

By Eddie Cross

I was astonished to hear the other day that there are now over 85 000 Chinese nationals living in Zimbabwe. I questioned this estimate and was told no, its real. What on earth are they doing here? They are not migrants; they all want to go home eventually. Many have their families back in China and go back regularly. They are here to work? Why?
Then it dawned on me, we are the new Australia. They have targeted us for raw materials for the industrial monster at home. We have lots of targets – the largest iron ore deposits in the world, plenty of limestone and coal so we can make steel. They need to move steel production away from China to avoid US and European trade restrictions and to move dirty, polluting industry to the pristine blue skies of Africa.
We have the best Chrome deposits in the world, 9 billion tonnes of it worth a conservative US$100 trillion. We have enormous Lithium reserves and they are loaded with other critical minerals that are in fact worth more than the Lithium and we do not understand what that means. We applaud them because shortly we will be exporting 5 million tonnes of lithium concentrate a year to China, worth perhaps US$4 billion in new export earnings, four times our famous tobacco crop, but missing the fact that it might contain other metals and minerals worth many times more.
A quarter of our gold output goes to China and we have no idea about how they are doing that or what is involved, but the evidence of open cast mining, large investments in milling and extracting machinery for the small-scale mining industry here which is among the most important in the world, is everywhere. They ignore environmental regulations and leave behind a moonscape of countryside that looks like a World War 1 battlefield.
They are exploiting our finest coal reserves for their smelters and steel production, even exporting their surplus.
It all started when we discovered the Marange diamond fields and they joined forces with our old army generals and created a company that was eventually responsible for 80 per cent of the production of raw diamonds there. I estimate that US$30 billion in raw diamonds has been produced between 2008 and today. At one stage we were larger than Botswana as a diamond producing State.
The Chinese company that was involved was a tiny, rural corporation in China, owned by the Red Army. Today it is a multinational corporation with a whole bevy of top-class hotels, a private Jet and headquarters for Africa in Mozambique. Our old Army Generals all benefitted greatly, just look at the homes many of them have built in this country, the physical evidence of Chinese owned real estate in Harare is everywhere. The people of Marange still wallow in poverty and the active diamond fields do not have a single kilometer of tarred road although they have an international standard airport which can receive large aircraft to fly product out and bring people and equipment in.
In the field of infrastructure to support all these large-scale investments, Chinese activity is focused totally on what they need to achieve their goals here. Power, water, railways, even Port capacity. Just to give you some idea of the scale of what they have in mind they plan an artificial Port on the coast of Mozambique capable of handling 200 million tonnes of cargo annually. That is four times the capacity of Maputo.
What concerns me, is that none of this activity has any application to the needs of Zimbabwe. When I investigated the Marange diamond fields in 2012, as a Member of Parliament, I was able, with relative ease, to get the production information I needed for 5 of the 6 mining companies involved. Why, because they all employed Zimbabweans and I got daily output figures and even quality data (19 per cent Gemstone quality) and even sales data. The last remaining miner was Chinese owned and operated and they employed no Zimbabwean staff. To estimate what they were doing I had to look at US sourced satellite images which clearly showed what was going on below.
The benefit to Zimbabwe of this level of Chinese activity here is evident. They buy the majority of our tobacco, our ferrochrome exports run to tens of millions of dollars a year. Drive past Hwange Colliery, owned notionally by the Government but in fact now largely a Chinese asset. The smoke stacks of coke batteries belching into the atmosphere. The queues of heavy-duty trucks carrying coal to local and regional markets. The road north and south now smashed and barely usable.
There is little or no value addition except for the primary production phase. There are no plans to invest in a Lithium refinery to produce a product suitable for use in the production of batteries. Even the steel plant is only producing steel billets for export to China for conversion into finished product. International sanctions may force them to produce steel for sale to manufacturers in the West but for the time being they are producing a product for export in primary form.
Right now, the decision by the Zimbabwe Government not to maintain power subsidies on electricity going to their furnaces, is forcing the Chinese companies to invest in coal-based power production.
They are doing so at a cost of US$600 000 per megawatt with the objective of meeting their own needs at about US$6 cents per Kilowatt, one third of the current ZESA tariff which is necessary because the new Chinese built power station at Hange cost three times per Megawatt than what their own plant will cost. To achieve those sorts of outcome they will have to secure coal at rock bottom prices, while they supply ZESA at three times the cost.
This is a very concerning situation and the question for us as a nation, is what do we do about it. First we have to recognise, that unlike Australia where privately owned and operated mines for coal and iron ore, mine these products for sale to China at a market related price. Australia has therefore been one of the main beneficiaries of the Chinese expanding economy. Australian criticism of Chinese human and political rights has evoked a very strong response leading to the sort of activity we see here.
The Belt and Road initiatives in African and many other developing States almost always involve overpriced infrastructure which has to be financed on commercial terms. Hwange Power Station is a prime example, the railway line in Kenya and Ethiopia is another example. In many respects the main reason for this is that the Western world has not been either active or supportive.
We in Zimbabwe need to recognise that China can be used to drive development but it must be on our terms. They must employ our people, their investments in infrastructure must serve out nation and not just their interests. We must get back full value of our exports to China. Our relationship with China must be carefully balanced, they must not be allowed to bribe our officials to secure benefits that are not in our national interests.
The rape and pillage of our resources for marginal results simply cannot be allowed to continue.

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