First Lady linked to platinum deal

A company that has been doing business with First Lady Grace Mugabe is said to have been given a platinum concession though it has no exploration or mining expertise, according to a diplomatic cable released by Wikileaks.

According to Alex Mhembere who was the chief executive of Zimplats at the time, the Implats owned mining company had surrendered parts of its Hartley Complex to the government in 2006 as part of its empowerment credits.

Mhembere said the parts had been split into four sections with Ruschrome taking over the Darwendale section.

A Chinese company called Global Platinum was trying to sell the claim that it had acquired.

A Russian company had sold part of its claim to a United Kingdom company called Amari.

A Hong Kong company Global Cross had acquired some ground while an unnamed South African company was also discussing purchasing some ground.

Mhembere said that Global Platinum Group, Amari and Cross Global had no exploration or mining expertise. He assumed they were asset speculators.

Global Cross has been linked to President Robert Mugabe and his wife by the London Sunday Times which claimed that it had purchased a house in Hong Kong for $5 million for Mugabe in June 2008.

A South African Hsieh Ping-Sung had bought Cross Global “off the shelf”, the paper said.

The First Lady seems to have fallen out with Ping-Sung.

Full cable:

Viewing cable 09HARARE141, PLATINUM – ZIMBABWE,S BELEAGURED GOLDEN GOOSE

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

VZCZCXRO7719

PP RUEHBZ RUEHDU RUEHMR RUEHRN

DE RUEHSB #0141/01 0511002

ZNY CCCCC ZZH

P 201002Z FEB 09

FM AMEMBASSY HARARE

TO RUEHC/SECSTATE WASHDC PRIORITY 4077

INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHUJA/AMEMBASSY ABUJA 2205

RUEHAR/AMEMBASSY ACCRA 2643

RUEHDS/AMEMBASSY ADDIS ABABA 2765

RUEHBJ/AMEMBASSY BEIJING 0090

RUEHBY/AMEMBASSY CANBERRA 2034

RUEHDK/AMEMBASSY DAKAR 2390

RUEHKM/AMEMBASSY KAMPALA 2814

RUEHNR/AMEMBASSY NAIROBI 5242

RUEAIIA/CIA WASHDC

RUEHGV/USMISSION GENEVA 1935

RHEHAAA/NSC WASHDC

RHMFISS/JOINT STAFF WASHDC

RUEHC/DEPT OF LABOR WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RHEFDIA/DIA WASHDC

RUCPDOC/DEPT OF COMMERCE WASHDC

RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

RUZEHAA/CDR USEUCOM INTEL VAIHINGEN GE

C O N F I D E N T I A L SECTION 01 OF 03 HARARE 000141

SIPDIS

AF/S FOR B.WALCH

AF/EPS FOR ANN BREITER

NSC FOR SENIOR AFRICA DIRECTOR

STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN

TREASURY FOR D. PETERS

COMMERCE FOR ROBERT TELCHIN

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

E.O. 12958: DECL: 04/01/2018

TAGS: EMIN EINV PGOV ZI

SUBJECT: PLATINUM – ZIMBABWE,S BELEAGURED GOLDEN GOOSE

REF: A. HARARE 110

¶B. HARARE 096

¶C. 2008 HARARE 459

¶D. 2007 HARARE 172

Classified By: Ambassador James D. McGee for reason 1.4 (d)

——-

Summary

——-

¶1. (C) Zimbabwe’s rich platinum resources contributed a

third of the country’s exports, excluding gold, in 2008. The

ore came from two mines. Platinum claims surrendered to the

government in recent years by mining companies in return for

empowerment credit have for the most part ended up in the

hands of asset speculators, apparently including President

Mugabe. Rogue investor Billy Rautenbach, in the meantime,

appears to have run into technical problems, compounded by

USG sanctions, in developing his company’s recently acquired

platinum claim. Cleaning up the minerals sector would go a

long way toward stabilizing Zimbabwe,s economy. End Summary.

——————————————— ——-

Platinum ) Zimbabwe’s Goose that Lays the Golden Egg

——————————————— ——

¶2. (U) Zimbabwe,s mineral-rich Great Dyke (Ref D) has four

major platinum complexes that constitute the world’s second

largest platinum reserves: At its southern tip, near

Zvishavane, is the Wedza Complex, where Impala Platinum

(Implats) and Aquarius Platinum jointly operate the Mimosa

mine; north of the Wedza Complex, near Shurugwi, is the

Selukwe Complex where Anglo American and Central African

Mining & Exploration Company (CAMEC) have claims not yet in

production; further north, about an hour west/southwest of

Harare, is the Hartley Complex dominated by Zimbabwe Platinum

Mines (Zimplats); and at the far northern tip of the Great

Dyke is the undeveloped Musengezi Complex at Snakeshead,

controlled by African Consolidated Resources (ACR)(Ref A).

¶3. (SBU) Platinum group metals (PGM), predominantly

platinum, made up two thirds of Zimbabwe’s mineral exports in

2008 and one third of the country’s total exports (excluding

gold in both cases). Alex Mhembere, CEO of Zimbabwe Platinum

Mines Ltd (Zimplats), told econoff on February 9 that

Zimplats exported US$294 million in PGM in 2008 from its

Ngezi mine in the Hartley Complex. The Mimosa mine in the

Wedza Complex is Zimbabwe’s second of two PGM producers. It

exported about US$250 million worth of minerals last year,

according to Fungai Makoni, Mimosa’s General Manager for

Finance. The Reserve Bank of Zimbabwe reported in its

January 2009 Monetary Policy Statement (Ref B) that the

minerals sector (excluding gold) contributed 51 percent to

Zimbabwe’s total exports of US$1.6 billion in 2008. From

these numbers we derived PGM’s contribution to exports.

Zimplats anticipates doubling its 2008 ore production of 2.1

QZimplats anticipates doubling its 2008 ore production of 2.1

million MT by July 2009 once a new concentrator comes on

stream in May 2009, and doubling platinum production by June

¶2010.

——————————————— —-

Surrendered Claims Change Hands among Speculators

——————————————— —-

HARARE 00000141 002 OF 003

¶4. (C) Mhembere told us that the parts of the Hartley

Complex that Zimplats had surrendered to the government in

2006 had been split into four sections. RusChrome took over

the Darwendale section at the northern tip of the Hartley

Complex and has sought unsuccessfully to sell it. Of the

other three parts, a Chinese company called Global Platinum

Group was trying to sell the claim it had acquired; a Russian

company had sold part of its claim to a U.K. company called

Amari; a Hong Kong company Cross Global had acquired some

ground, while an unnamed South African company was also in

discussion for the purchase of ground. Mhembere noted that

Global Platinum Group, Amari and Cross Global had no

exploration or mining expertise; he assumed they were asset

speculators.

——————————————— ———-

First Lady “Dis Grace” Linked to Hong Kong Claim Holder

——————————————— ———-

¶5. (U) The Sunday Times reported on February 15, 2009 that

Cross Global, in which President Mugabe apparently has an

interest, purchased a house in Hong Kong valued at about US$

5 million for Mugabe in June 2008, and that South African

Hsieh Ping-Sung had bought Cross Global “off the shelf.” The

article also stated that Hsieh had made thousands of dollars

of purchases on behalf of First Lady Grace Mugabe in January

2008 and suggested that they were intended for distribution

to her husband’s supporters during the first presidential

election campaign in 2008.

——————————————— ————

Anglo American on Course; Rautenbach Operation in Trouble

——————————————— ————

¶6. (SBU) Anglo American’s Unki platinum mine in the Selukwe

Complex plans to initiate about 30 years of PGM production in

mid 2010, according to Colin Chibafa, Corporate Finance

Specialist at Anglo American in Johannesburg, who spoke to

econoff in Harare on February 11. Anglo American surrendered

about 30 percent of its PGM mineral rights in Zimbabwe to the

GOZ in 2008 in return for empowerment credit.

¶7. (C) CAMEC, which gained control over part of Anglo

American’s surrendered ground last year (Ref C), had

announced optimistically in July 2008 that it would start

production in 2009. Zimplats Director Greg Sebborn told us

on February 3, however, that CAMEC’s exploration team had run

into “serious geological problems” at the site; early

drilling results had disappointed both in quality and

quantity. In addition, Sebborn said CAMEC had based its

development plans on a high world platinum price that had

since crashed. (Note: The price of platinum fell from over

Qsince crashed. (Note: The price of platinum fell from over

US$2,200/oz in February, 2008 to under US$800/oz at

end-October 2008; it has since inched up to about

US$1,100/oz. End Note.) Further impeding CAMEC’s operation,

Sebborn and Chibafa told econoff separately that CAMEC’s

claim (which is about one third of Anglo Platinum’s

relinquished ground) was now the subject of a double-pegging

dispute with the South African mining entrepreneur Loucas

Pouroulis. (Comment: It is unclear whether Pouroulis had

double pegged CAMEC,s claim or the GOZ had sold the rights

twice. End Comment.)

HARARE 00000141 003 OF 003

¶8. (C) Chibafa added, with some schadenfreude, that Anglo

American had recently rebuffed a request from CAMEC for water

from Anglo American’s nearby Unki mine complex. He also told

us that CAMEC’s operation was hamstrung by inadequate power

supply. We had predicted (Ref C) that major CAMEC

shareholder Billy Rautenbach*a Specially Designated

National*would flip the asset quickly. However platinum

executives pointed out to us that the claim was far more

valuable with proven rather than unproven reserves, thus

explaining Rautenbach’s investment*at a minimum*in

exploration.

¶9. (C) Whether Rautenbach can continue to finance

exploration is unclear. In January, a Rautenbach contractor

on a different project told econoff that USG sanctioning of

Rautenbach had dried up some of his companies’ lines of

credit and put him under considerable financial stress.

Compounding Rautenbach’s problems, Zimbabwe’s independent

weekly The Standard reported in its February 15-21, 2008

issue that about 2,000 families had refused to vacate their

smallholdings to make way for an ambitious Rautenbach

bio-diesel project in Masvingo province. Having led the

removal of white farmers from their farms, they didn’t want

to give up their land to another white person.

——-

Comment

——-

¶10. (C) Zimbabwe’s second largest platinum reserves in the

world have the potential to earn the beleaguered economy huge

foreign exchange returns. Yet the GOZ frightens away serious

investment by threatening reputable players, mineral rights

and breaching contractual agreements. On top of that, in

characteristically short-term thinking, it apparently has

sold the platinum claims wrenched from major international

investors to asset speculators, including Mugabe himself.

Cleaning up the minerals sector would go a long way toward

stabilizing Zimbabwe,s economy.

MCGEE

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