Africa Confidential Reports details of ZANU-PF Money trail

As mentioned in the previous posting on the ZSG blog, the ability of insiders in ZANU-PF to pilfer foreign exchange earnings from the most lucrative mining interests in Zimbabwe has lead to the re-investment of these funds in lucrative opportunities elsewhere. Africa Confidential reports on July 18th of some of the strategies being used in relation to mining, in this case asbestos mining. Africa Confidential reports:

"Earlier this month, a judge granted AMG Global Nominees an appeal hearing for 3 November in its long-running fight to take control of the London-listed Africa Resources
Limited (ARL) and its asbestos mines, owned by Zimbabwean businessman Mutumwa Mawere (AC Vol 49 No 12).An article on 27 June in Zimbabwe's daily state mouthpiece The Herald let slip that AMG Global Nominees 'represents Government [sic] interests'. AMG Administrator Afaras Gwaradzimba, appointed by Justice Minister Patrick Chinamasa, said in
an interview that AMG had received 'US$2 million from the Reserve Bank' in a bid to force Mawere to divest control in ARL. Charles Hewetson, a partner at Reed Smith, told AC that Gwaradzimba was independently appointed and the government's relationship with AMG was as a creditor to the asbestos mines. "

The entire article gives much greater detail.

British Mining Firm Camec Comes Under Fire for Direct Aid to Mugabe's Government

Brian Latham at Bloomberg.com reports an interview with the MDC's Roy Bennett in which Bennett suggested that mining contracts granted by Mugabe's government to the London-based mining company, CAMEC, may need to be reviewed and investigated.

Latham writes:

"Permits that may be re-tendered or canceled because of links to the ruling Zimbabwe African National Union-Patriotic Front include those awarded to Central African Mining & Exploration Co., Bennett said in a telephone interview today from Johannesburg, South Africa. The MDC's plans were reported by the Financial Times earlier today.

``There is a tangle of business intrigues involving foreign and local companies tied to Zanu-PF, Camec among them,'' Bennett said. ``All these need to be investigated thoroughly and where wrong-doing or corruption are found, we'll cancel contracts and re-tender them legally.''

Camec in April agreed to pay $120 million for a stake in a platinum venture part owned by Zimbabwe's state-owned mining company and said it would lend a further $100 million to President Robert Mugabe's government. The southern African nation has the world's second-biggest platinum reserves, after South Africa.

Ben Brewerton, a spokesman in London for Camec, said that while the company wouldn't respond directly to Bennett's comments, its activities in Zimbabwe are in full compliance with all relevant national and international laws.

``Camec believes that making early stage investments in countries which are in transition is the best way to help the people of Africa while also generating shareholder value,'' Brewerton said in an e-mailed statement. "


The timing of Camec's payments, in April during the run-off campaign and during the intense political violence against the opposition shows the extent to which international mining concerns are competing for access to Zimbabwe's platinum. Worried about China's ability to gain favor through arms shipments and "no questions asked" loans, these British and South African mining companies are willing to make substantial payments directly to the ZANU-PF regime.

Camec has been involved in negotiations with the government in the DRC for mining rights, and like most mining companies in Southern Africa, know how to play the political game. In August 2007, they were involved in a tussle over DRC mining contracts. See article in the Independent [UK] by Danny Forston.

One might wonder why the MDC's Roy Bennett is talking to the Press about renegotiating mining contracts, given the MDC's bargaining position at the moment. Unless there is the hope that mining companies will help finance the MDC as a hedge against a possible future GNU? If the MDC does receive funds from international mining concerns it would raise the interesting question: Could ZANU-PF criticize them as "imperialists" and "sell-outs" if both parties receive funds from the same sources?

Even as the economy is a nightmare for the majority of Zimbabweans, the ruling elite has access to large amounts of dollars and no shortage of sources. Targeting sanctions to these individuals may make it more difficult to stash money abroad, but it doesn't make it impossible. For example, re-investing such monies in DRC mining concessions gained during Zimbabwe's defense of Kabila Senior and Junior during the Congo wars is one way to keep it out of Western banks. There are no shortage of ways to hide and/or invest money in the "shadow economies of war".

Zimplats Reassures Investors on Zimbabwe Platinum Mines

As with Anglo American, Zimplats, the South African mining company with the largest platinum mining operation in Zimbabwe, reassured its investors that its holdings are secure and operating smoothly.

As the Guardian [UK] Business page reports today:

"Zimplats operations and the expansion project at Ngezi, Zimbabwe are operating satisfactorily," the firm said in a statement. The firm has open-cast and underground operations, located south-west of Harare.

"Zimplats has recently experienced limited political activities at its operations. These activities however, have not impacted on the safety of personnel nor have had a material effect on company operations."

Zimbabwe, which has the second-largest platinum reserves after the world's top producer South Africa, is mired in a political crisis over a presidential run-off on Friday.

President Robert Mugabe went ahead with the election even after opposition leader Morgan Tsvangirai withdrew, saying violence by Mugabe's supporters meant it could not be fair, and despite widespread international condemnation.
Zimplats said that in the short to medium term, its major challenges were retention of skills, reliable power supplies and the rebuilding of the local supplier network."

Zimplats and Anglo-American are in competition with Chinese mining interests in exploiting Zimbabwe's extensive platinum reserves. Platinum prices are extremely high at present, in part in anticipation of future demand for fuel-cell manufacturing.

As the US and the UK talk of expanding sanctions against Zimbabwe, it will be interesting to see if platinum mining enters the picture, or will it be excluded for its strategic importance?

Brings to mind the debate over chrome mining in Rhodesia during the sanctions debate of the 1970s.

Anglo-American Platinum Investment: Bad Timing? or Strategic Timing?

The BBC Radio World Service interviews Sir Mark Moody-Stuart is Anglo American's chairman about AA plan to go forward with a large investment to develop a platinum discovery in Zimbabwe. It is worth a listen. The Moody-Stuart's logic is that if they don't proceed, the current regime will take back the rights to the platinum claim "and give it to someone else". With platinum prices at 3 times the price of gold, the competition between South Africa, China, and Anglo American has heated up. Talk of economic sanctions will likely not involve these big players.

Here is the article and link to the audio file:

Investment in Zimbabwe attracts criticism

Anglo American, the big London-based mining company, is planning to make probably the biggest foreign investment in Zimbabwe to date - 400 million dollars to build a platinum mine.

British politicians have criticised the decision but Anglo American is adamant that no sanctions have been breached and no laws broken.

Sir Mark Moody-Stuart is Anglo American's chairman. Newshour's Robin Lustig asked him whether, in light of recent events, he had misgivings about the decision:

Listen to the interview here