Details and value of agreements between Zimbabwe and China- Mthuli Ncube

HON. MARKHAM: Thank you Madam Speaker.  I would like to thank the Minister for his answer.  I just need clarity on one point.  The issue of the power line, the joint venture.  The power line from Sherwood to Mvuma, confirm that joint venture is only for the power line and not for the mine?  I thank you.

HON. PROF. M. NCUBE: I thank Hon. Markham for really giving us the opportunity to explain a lot of things.  I thank him for his detailed question.  Certainly, the joint venture is just about the power line. What is really going on is that ZESA was unable to make the necessary investment on the 100km evacuation power line.  So the partner who is vested in the mine made an offer to finance the power line through a joint venture arrangement so as to get power to operate the mine and produce the carbon steel.  That is the arrangement but that JV is only on the development or investment on the power line.  I thank you.

HON. BITI:  I have got two questions to the esteemed Minister.  You said that the amounts we owe to China are about US$1.7b but your mathematics is not adding up because you said total indebtedness to China was US$2.7b and you have only paid US$152m.  So if you subtract US$152m from US$2.7b, it does not give you US$1.7b but it is about 2.6b.

My substantive question however pertains to the loan you referred to of 2006 which was for US$200m.  So, Government of Zimbabwe borrowed US$200m from China to purchase farm mechanisation equipment but you said this loan was collateralised by 26m ounces of platinum.  If you do rough mathematics, assuming the price of platinum for an ounce is US$2000, you are talking of US$52b for the 26m ounces.  How is it possible that the Government can borrow US$200m from China and give an asset which in gross terms is US$52b?

HON. PROF. M. NCUBE:  This arrangement was struck way back in October 2006, I think before the buoyant prices that you see in the PGM sector were available for us to enjoy.  So, I think in a sense, he is requesting that some of these arrangements should be looked into given the high prices that are currently out there.   Certainly, for me as the Finance Minister is something I would want to look at closely and see how best this can be structured so that a good will loan from China is dealt with and serviced properly on the back of a properly valued asset.  That is what I said at the end that this arrangement is subject to proper resource evaluation and the current prices that he mentioned matter.  We will look into it to ensure that the lender is dealt with fairly for their good gesture while the debtor, who is ourselves, is adequately treated the right way in this regard.  I thank you.

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