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China offers Zim $3bn for platinum

Feb 04 2011 15:41 Reuters

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Harare - China has offered Zimbabwe $3bn for vast platinum reserves, a local private newspaper reported on Friday but said the deal was likely to be rejected by the government over its terms.

Zimbabwe, with an estimated $6bn yearly economy, has the world's second largest platinum reserves after South Africa.

It has relied heavily on Chinese investment to prop up a staggering economy largely shunned by the West over President Robert Mugabe's suspected human rights abuses.

Quoting sources in Zimbabwe's unity government, the weekly Zimbabwe Independent said the master-loan-facility from the Export-Import Bank of China would give Harare the money to revive an economy wrecked by what many see as chronic mismanagement by Mugabe's ZANU-PF party.

"Sources said the deal has been received with scepticism in government circles because it has stringent conditions," it said, citing these as "mortgaging platinum reserves, ceding Chiadzwa (state) diamond revenues and tollgate fees."

Finance Minister Tendai Biti reportedly told the Independent talks were going on with the Chinese, but declined to discuss details.

Biti and Mines Minister Obert Mpofu were unavailable for comment. Chinese officials were also not available for comment.

On Monday, Economic Planning and Development Minister Tapiwa Mashakada told Reuters the state-run China Development Bank could fund up to $10bn in Chinese investment in Zimbabwe's mining and agriculture sector.

The announcement could be aimed at trying to prod Western investors to sink more money into Zimbabwe out of fear they will lose ground to China, analysts said.

Western investors, already cautious of doing business with Zimbabwe due to its precarious political position, are also worried about a law that says 51% of firms worth over $500 000 should be owned by black Zimbabweans.

Resource-hungry China, which has strong ties with Mugabe's ZANU-PF party from the 1970s, has been steadily increasing its investments.

Its Foreign Minister Yang Jiechi is due to visit Zimbabwe next week to explore business opportunities in the mineral-rich country.

A unity government formed by Mugabe and rival Prime Minister Morgan Tsvangirai in 2009 has brought stability to an economy crushed by hyperinflation about two years ago.

platinum  |  china  |  zimbabwe
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