Zimbabwe buckles under Chinese pressure to lift chrome export ban

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by Staff Reporter

HARARE-PRESIDENT Robert Mugabe’s government last week gave in to unrelenting pressure from the Chinese mining firms and lifted a four-year ban on the export of raw chromite.

Chrome Mining Sector in Zimbabwe: The Chininga Report

Chrome Mining in Zimbabwe

Although Mines and Mining Development minister, Walter Chidhakwa, gave as the reason for this major policy change, the need to boost earning for the struggling sector, government sources said the move was a result of intense lobbying and serious arm-twisting by the powerful Chinese who have grave misgivings about their long-term stay in the country.

“It is hoped that the temporary lifting of the ban on chrome ore exports should generate additional foreign currency,” Chidhakwa was quoted as telling the media last week.

However sources close to the ministry pointed out that there was very little the government could have done under relentless pressure from Chinese mining resources groups that are eager to loot the country the same way they did in Marange.

“The idea of banning raw chrome exports was meant to force mining firms to process and even beneficiate the mineral before export so that the country could earn more. But this is what the Chinese mining resource groups have been resisting… because most of their investments are shady and closely linked to President Mugabe’s regime, they cannot commit themselves to long-term investment because they do not know for how long they would be here,” the source pointed out. Some of the firms are joint ventures between the Chinese military and their Zimbabwean counterparts.

Raw chrome ore fetches as little as $250 whereas when in the processed form, the prices can be as much as $4000.

Added the source: “Because Mugabe has become too dependent on the Chinese, it was only a matter of time before the ban was lifted… there was no way Harare could insist on its demand that the mining houses process the mineral locally.”

Although the Chinese—to whom Mugabe has literally mortgaged the country’s mineral resources—are not subjected to thorough scrutiny (and are also regarded as some of the worst employers the country has ever seen) they had largely ignored the ban and had continued to export semi-processed chrome while negotiations dragged on. The negotiations involved a veiled threat by the mining firms to pull out of Zimbabwe altogether, which would make most of the loans extended to Zimbabwe by Beijing immediately due. Harare primarily uses its mineral resources as collateral when negotiating loans with its so-called all-weather friends—the Chinese and the Russians.

Recent media reports suggested that one Chinese diamond mining firm—Jinan, was being investigated for externalizing nearly US$550 million from the increasingly impoverished south African country, while Chinese mining firms have been known to have played a central role in looting dry the Chiadzwa (Marange) diamond fields.

The Zimbabwean chrome-mining sub-sector is controlled by Zimasco Pvt Limited, which accounted for about 70 percent of production in 2014. Zimasco itself is owned 92 percent by Sinosteel Corporation, a Chinese parastatal, in blatant violation of the country’s indigenisation laws that insist on Zimbabwean individuals and entities controlling a majority stake in all large businesses operations.

The company has chromite mining locations in Shurugwi, Guinea Fowl, Lalapanzi, Mutorashanga and tributary operations along the Great Dyke of Zimbabwe.

While the reasons given for the ban appeared economically sound, it is strongly believed that the blanket ban (with loopholes especially created to benefit the Chinese all-weather friends) was meant to spite western countries that are desperate to build as much chrome reserves as their can.

Chrome—a hardener primarily used in steel-making, chrome metal super alloys, chrome chemicals and chrome-based refractory products—is regarded as one of the minerals of the future, and most countries especially those in the West, import and stock-pile it for use in the future. Zimbabwe is the world’s fourth largest producer of high-grade chromite, but it is also the only country that exports the mineral in its raw form, attracting keen interest from Western nations.

To show how important Zimbabwean chromite is to Western interests, when in 1966 the United Nations imposed sanctions on Rhodesia in response to the Unilateral Declaration of Independence by the minority regime of Ian Smith, the American government—feeling the boomerang effects of this embargo especially on its access to high-grade chromite—in 1971 passed what was called the Byrd Amendment—named for its author, Senator Harry F. Byrd, Jr. of Virginia—an amendment to the U.S. Federal Strategic and Critical Materials Stock Piling Act. It created an exception in the United States embargo of Rhodesia regarding chrome ore, the main alternative source for which was the Soviet Union.

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