Former army commander Solomon Mujuru told Zimplats chief executive Greg Sebborn way back in 2005 that he was running the country on a day-to-day basis.
Sebborn told United States embassy officials that Mujuru had approached the company offering to be its indigenous partner and protector.
He said Zimplats had tried unsuccessfully to meet President Robert Mugabe to clear up some misunderstandings, especially reports that the Chinese wanted to enter the platinum industry.
Mujuru had told him that Mugabe was quite unstable and was subject to dramatic mood swings, but he, Mujuru, was now running the country day-to-day.
Mujuru also promised Sebborn that he would prevent China from entering the platinum industry.
Embassy officials said Mujuru’s claim to be running the government may have been exaggerated to magnify the appeal of his “protection” offer to Zimplats, but it was consistent with other reports that the embassy had been hearing that while Mugabe remained firmly in control, he was exercising that control only episodically.
Viewing cable 05HARARE1088, ZIMPLATS CEO ON CHINESE INTEREST IN PLATINUM
This record is a partial extract of the original cable. The full text of the original cable is not available.
021022Z Aug 05
C O N F I D E N T I A L SECTION 01 OF 03 HARARE 001088
AF FOR DAS T. WOODS
AF/S FOR B. NEULING
NSC FOR DNSA ABRAMS, SENIOR AFRICA DIRECTOR C. COURVILLE
USDOC FOR ROBERT TELCHIN
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FOR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON
E.O. 12958: DECL: 12/31/2010
SUBJECT: ZIMPLATS CEO ON CHINESE INTEREST IN PLATINUM
SECTOR, INTERNAL GOZ POLITICS
Classified By: Charge d’ Affaires a.i. under Section 1.4 b/d
¶1. (C) Zimbabwe Platinum Mines (Zimplats) CEO Greg Sebborn
told CDA on July 29 that his company was not worried about
China’s interest in Zimbabwean platinum in the long-term
because China lacked the technological know-how to compete.
However, the Chinese could cause short-term problems by
leveraging their political influence with Mugabe into control
of a part of the deposits. Sebborn speculated that some in
China might have realized that Zimbabwean platinum deposits
were severely undervalued and would be worth a great deal
when the country became more stable. However, such a move
would violate Zimplats agreement with the GOZ and lead to
arbitration. Sebborn said Zimplats had unsuccessfully sought
a meeting with Mugabe to clear the air. In the interval,
Solomon Mujuru had offered to be the company’s indigenous
partner and protector. Sebborn said Mujuru had claimed to be
running the country day-to-day and had promised to prevent
Chinese involvement in Zimbabwean platinum mining. Sebborn
added that the company was still prepared to invest US$ 2
billion in Zimbabwe but was still waiting for the GOZ to
agree. End Summary.
¶2. (C) The CDA asked Sebborn about China’s reported interest
in Zimbabwe’s platinum sector. Sebborn responded that China
was clearly interested in long-term access to Zimbabwe’s
platinum deposits, the fifth largest in the world, and was
using its political clout with Mugabe to that end. However,
China was selling the GOZ a bill of goods. They had promised
to build a platinum refinery in return for a share of the
deposits but in fact lacked sufficient technical expertise to
do so. (N.B. There are only five platinum refineries in the
world, two in South Africa.) At best, China could build
another base metal refinery similar to the one that Zimplats
had already built in Zimbabwe. These refineries produced a
semi-processed “conglomerate” that needed to be further
refined to extract platinum.
¶3. (C) Sebborn said his company had told the GOZ that they
were willing to talk to potential Chinese investors but
feared that the GOZ would instead force Zimplats to give the
Chinese a portion of the ore-body. He said the Chinese
seemed most interested in the northern end of the deposits,
which ran northeast to southwest for nearly 100 kilometers,
starting just outside Harare. The northern portion was
attractive because it was close to the capital and to water,
and because the platinum was relatively close to the surface
and easy to mine. However, it was a “greenfield” site that
would still require a massive investment even beyond the base
metal refinery and Sebborn stated that he had been unable to
learn anything about the Chinese company rumored to be
involved, Wan Bad. It was not clear that the company even
existed except on paper.
¶4. (C) Sebborn said any such move would violate the
agreements signed between the GOZ and his parent company,
Impala Platinum (Implats) and would provoke arbitration under
Swiss jurisdiction as provided for in the agreement.
Moreover, Sebborn questioned China,s motives. He noted
China buys the majority of its platinum from Implats and that
Implats could easily reduce China’s access to platinum by the
exact amount that its Zimbabwe affiliate lost as a result of
any GOZ deal with China. Instead, he speculated that someone
in China might want control of part of Zimbabwe’s ore body as
a cheap asset that could later be sold at a huge profit. Due
to Zimbabwe,s astronomical sovereign risk, Sebborn estimated
that the ore body was undervalued by a factor of 10.
Relations With GOZ
¶5. (C) Sebborn said that although Zimplats did not fear
China’s interest in the long-term, they were concerned that
it could cause delays and confusion in developing the
platinum deposits. Zimplats was still prepared to invest
US$2 billion in Zimbabwe. Zimbabwe only needed to properly
enforce already existing mining laws, sign an already
agreed-to Bilateral Investment Protection Agreement with
South Africa, and come up with a detailed credible
indigenization scheme that could be implemented. The
investment would include a 10-fold increase in Zimplat,s
local direct hires, plus an additional 55,000 jobs in support
industries resulting from the expansion. It would also dwarf
the loan package the GOZ was currently negotiating with the
South African Government and would not require repayment.
¶6. (C) However, Sebborn said the GOZ was continuing to drag
its feet. Given Mugabe’s desire to reward the Chinese, no
one wanted to make the wrong decision and agree to a deeper
Zimplats investment. Moreover, Zimbabwean officials were
deeply distrustful of private enterprise and the mining
industry in particular. This was exacerbated because they
lacked a clear understanding of how the platinum industry
worked. The GOZ officials thought they could purchase
platinum from the mine, as they did with gold, using the
official exchange rate and then turn the precious metal into
hard currency abroad at world prices. In fact, the GOZ had
posted monitors at the mines to detect platinum smuggling,
when the platinum itself was still part of the semi-processed
going to South Africa for further refining.
¶7. (C) Sebborn said Zimplats had been seeking a meeting with
Mugabe for some time to clear up misunderstandings but to no
avail. However, in the interval, Solomon Mujuru, the
powerful ex-military commander and husband of Vice President
Joyce Mujuru, had approached the company offering to be its
indigenous partner and protector. Sebborn noted that in so
doing, Mujuru was going against Mugabe’s wishes. Mugabe had
personally picked out Zimplats “indigenous” partner, a group
that had so far been unable to obtain the financing needed to
buy into the company. Moreover, according to Sebborn, Mujuru
had also promised that he would prevent China would from
entering the platinum industry. Sebborn said Mujuru had told
him that Mugabe was “quite unstable” and subject to dramatic
mood swings and that he, Mujuru, was now running the country
¶8. (C) Mujuru’s claim to be running the government may have
been exaggerated to magnify the appeal of his “protection”
offer to Zimplats, but it is consistent with other reports we
have been hearing that while Mugabe remains firmly in
control, he is exercising that control only episodically.
The result is increasing government paralysis and a growing
power vacuum. It may be the case that no one is truly
“running” government operations any more so much as acting in
his/her narrow personal interest; and the Mujuru’s sway and
energy in that regard are unrivaled save by the aging and
increasingly distant Mugabe himself.
¶9. (C) South African diplomats have stressed to us SAG
concern about Chinese designs on Zimbabwe’s platinum, but
mining insiders here share Sebborn’s dismissive attitude
about prospects for any Chinese platinum refining plant.
Mining is the sector perhaps most poised to revive in
Zimbabwe’s gasping economy, but even it remains constricted
by GOZ incompetence and the narrow avarice of key ruling