In the past 5 years, Zimbabwe has become of significant importance to the Peoples Republic of China. In this article, I want to describe what they are doing and its implications for Zimbabwe. Perhaps two preliminary observations. First, this initiative is carefully managed and coordinated from China itself, secondly, it has profound implications for this country and perhaps the region as a whole.
Eddie Cross The initiative involves 4 commodities – High Carbon Ferrochrome, Lithium, Steel and Gold. In these 4 sectors, China has mounted a major effort to secure supplies, and these are of such a nature and size as to be significant, even in a giant economy like China. In pursuit of these goals, Chinese Nationals have poured into Zimbabwe – last year estimates put this at 150 000, today the general consensus is that it may be larger than this. Supporting evidence are the numbers arriving by plane at our airports, the queues at immigration offices seeking permits of one kind or another and a massive property acquisition program with new buildings with Chinese signage, some of which look like hostels. Then there is the inwards investment flows. I am not sure that these are being adequately recorded, but in 2025 they probably exceeded US$3 billion. Imports of heavy equipment and engineering inputs are constantly on the move. There is some dependence on local manufacturing and services, but by and large they seek to be self-contained in every way. Local staff employment is limited and restricted to less skilled occupations. To support this program, Chinese firms are building 7 or more coal fired power plants around the country. Already this capacity might exceed to installed capacity of the national utility ZESA (Private) Limited. Within 3 years these new generation plants will be producing all the energy needed for the Chinese program. Looking at each of these sectors, lets estimate what they are likely to be producing for China in the next 3 years or say by 2030. High Carbon Ferrochrome. Zimbabwe has about 25 per cent of the worlds chrome reserves. What makes this particularly attractive is that most are on the Great Dyke and in the form of narrow seams at relatively shallow levels. Unlike the pod deposits in South Africa which require more expensive mining. Smelted in electricity driven furnaces, this is converted into a quality product, much in demand world wide for the Stainless Steel industry or as a steel hardener for military and civilian purposes. Today it has a market value of about US$2000 a tonne in Europe, slightly less in China. The Chinese target for this exercise is 3 million tonnes a year, worth at least US$5 billion annually in exports. It will use 2000 megawatts of electricity, equivalent to over 80 per cent of the country’s total consumption of electricity today. Lithium. Unlike chrome, lithium is found all over the world and the choice of Zimbabwe as a major source of supply is clearly strategic. China has taken control of over 14 lithium deposits and is developing all of these rapidly, financial resources do not seem to be a limitation. Already output is nearly 3 million tonnes of lithium concentrate, and I think they will exceed 15 million tonnes in three years. At US$1600 a tonne, this would result in exports to China worth at least US$24 billion. The Government has demanded that this output be upgraded to Lithium Sulphate – a product then much closer to be useable in the solar industry and this is now well underway. It will reduce the volume of exports but not its value. This will require another 800 megawatts of electrical energy. Steel. All of us were puzzled when a Chinese Steel company took control of the iron ore deposits near Mvuma. We were told that these could reach 30 billion tonnes of iron ore with over 60 per cent Fe. But they rapidly followed this up with a steel plant on site and this is now in full production at about 800 000 tonnes a year. No sooner was this commissioned, but they started on a second and plans are in hand to maximise output on site, limited probably by water. Certainly, the target exceeds 5 million tonnes a year, worth about US$7 billion dollars in sales. The question is why Zimbabwe? There may be several answers – much of Chinese steel capacity is now in plants more than 50 years old, old technology and very polluting. In addition, their main supplier of iron ore is Australia, and they want to diversify away from that source because of the Australian position on human rights in China. Restrictions on trade in steel in many parts of the world may also play a part. And then there was gold. I estimate that about 120 000 of the Chinese Nationals now working in Zimbabwe are engaged in gold mining related activities. Its impossible to secure any statistics because they maintain tight security over this activity, but the physical evidence is everywhere in the gold mining areas. Large scale open cast mining, whole mountains disappearing, river bed mining is rampant. The Chinese operate hundreds of milling machines in gold districts and use both physical and chemical recovery systems. It is not possible to estimate what they are producing as there is little evidence of the output being sold locally. The motive is simple; they have accumulated trillions of US dollars in China and want to convert as much as possible into gold which they will hold as reserves. They bring dollars into the country and use this to buy gold, even at a premium. This is then refined abroad and taken into Beijing reserves. With the US dollar depreciating steadily (a deliberate policy) and the deteriorating situation with the US in general, this is seen as being essential. They were doing the same thing in Ghana and Mozambique and may well be active across Africa. The damage being done to the environment in Zimbabwe is massive and will be long lasting. As a consequence, Zimbabwe is awash with US dollars and this is yet another boost to our foreign exchange earnings, even though it cannot be measured. At US$4 700 a tonne the value of illicit gold exports must run to many billions. Taken altogether, we are looking at total Chinese output in this country reaching about US$36 billion a year for the three non-gold commodities. Gold could quite easily be US$10 billion a year today. In the past three years, formal sector hard currency earnings have gone from US$6 billion to US$22 billion this year. By 2030, given the growth in Chinese generated exports alone, our hard currency earnings could reach multiples of even this figure. There are widespread reports of under invoicing, but even so, Zimbabwe will benefit enormously from these activities, both in the form of investment and trading income. Employment will have a lessor effect, because of the widespread use of Chinese labour and skills. Just this week, Zambia cancelled an international conference planned for Lusaka, because it included Taiwanese elements. China is exerting this kind of control over African governments. The decline of interest by Western Governments in this part of the world, the decline in aid in all forms and a preoccupation with events in Europe and Asia have created the opportunity for China to step in, invest in critical infrastructure and secure control of resources, mainly for their own benefit. The political and economic implications are significant.
Source: The Growing Strategic Importance of Zimbabwe to China
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