China loan: Govt shakes down diamond miners

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THE government has directed diamond mining firms to sell all current gem stocks through the central bank, in a bid to secure a loan with unnamed “strategic financiers,” according to a Mines Ministry letter circulated to the industry.
Mines Minister Walter Chidhakwa confirmed the development in an interview with The Source on Friday, but refused to name the proposed financiers, saying the Finance Ministry was best placed to give details.
Zimbabwe has been actively seeking financial aid from China and a senior Chinese embassy official in Harare told The Source on May 6 that Beijing would only consider extending loans secured by Zimbabwe’s minerals.
The two governments have previously entered into mineral-backed financial deals, the most recent being the $98 million loan for the construction of Zimbabwe’s defence college just outside Harare, which was officially opened in 2012.
President Robert Mugabe’s cash-strapped government has battled to raise funding for its five-year economic programme, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET) since the veteran ruler, in power since 1980, was re-elected in yet another disputed poll last year.
The government has put ZIMASSET’s funding requirements – for infrastructure, agriculture, mining and manufacturing — at $27 billion, a herculean task given Zimbabwe’s huge arrears with multilateral finance institutions such as the World Bank and IMF and its government’s strained relations with its traditional Western donors.
After being isolated by the West, the Mugabe government has increasingly looked to China for succor, and Finance Minister Patrick Chinamasa announced that Zimbabwe was negotiating a “comprehensive package” with Beijing, although he has tempered his optimism in subsequent pronouncements.
In a move seemingly in response to Chinese demands, the Mines Ministry instructed all diamond miners to start channeling their diamond sales through the central bank.
“The Zimbabwe government is engaging strategic financiers to assist the government with funding,” permanent secretary in the Mines Ministry, Francis Gudyanga, wrote in a letter seen by The Source.
“You are therefore requested to prepare parcels of all your currently produced diamonds which must be sorted and evaluated with the involvement of the MMCZ (Minerals Marketing Corporation of Zimbabwe) in the usual manner by Wednesday 30 April 2014.Advertisement

“These parcels will be deposited with the Reserve Bank of Zimbabwe and used to securitise a government loan. Payment of these parcels will be done soon after depositing the parcels. The details of the processes will be discussed shortly.”
There are six diamond mining firms in the Marange alluvial diamond fields in Eastern Zimbabwe, mostly in partnership with the government’s Zimbabwe Mining Development Corporation.
The country also has privately operated mines – RioZim’s Murowa in Zvishavane, DTZ-OZGEO in Chimanimani and River Ranch in Beitbridge.