India, China slug it out for Zim spoils

The rivalry between China and India manifested during the bid for New Zimbabwe steel. (Aaron Ufumeli)

The rivalry between China and India manifested during the bid for New Zimbabwe steel. (Aaron Ufumeli)

The two countries are scrambling for natural resources to feed their economies, which have recorded rapid economic growth in the past decade.

Both have signed multibillion-dollar deals with the government and gained a foothold in key sectors of the Zimbabwean economy, including energy, construction, agriculture and mining.

In the energy sector, India's Essar Group signed a $4-billion deal to take over the ailing state-owned steelmaker, the Zimbabwe Iron and Steel Company (Ziscosteel), which was renamed New Zimbabwe Steel. It was hailed by industry and commerce minister Welshman Ncube as "the single largest foreign direct investment deal" of the decade.

But economic analysts said the Ziscosteel race reflects the open and intense rivalry between China and India. Several Indian-linked firms, including ArcelorMittal and Jindal Steel, also bid for the deal and had to stave off a challenge from the Chinese-owned Sino-Zim.

Tony Hawkins, professor of economics at the University of Zimbabwe, said he did not envisage traditional Western investors coming in as big players in Zimbabwe. 

"The new big players will be from China, India and other African countries as they are seeking to power up their economies with Zimbabwe's resources," he said. 

President Robert Mugabe's Zanu-PF party has used the influx of Chinese and Indian investors to underscore the success of the  "look east" policy, on which Mugabe embarked in 2003 after his fall-out with Western countries over often-violent seizures of white-owned commercial farms in 2000. 

Trade between India and Zimbabwe increased from $60-million in 2010 to $125-million last year. 

Diamond industry
India and China are also competing in the diamond industry.
In 2010 India bought more than 80% of Marange's alluvial diamonds at the inaugural diamond auction and sources in the mining sector said India was planning to build a diamond-cutting centre in Harare that would  train locals. 

China's Anjin is the government's biggest partner in mining the country's diamonds. Last year Zimbabwe produced eight million carats from its Marange diamond fields alone.

A diamond analyst, Aniruddha Lidbide, said: "Rough diamond production is declining in the world's leading mines so Zimbabwe is the only hope for Indian diamantaires."

Sources in the telecommunications industry said India was preparing  to inject capital into the struggling state-owned cellphone company, Net One. 

However, China's position in Zimbabwe remains unparalleled, with trade between the two countries reaching $1-billion in 2012, having doubled from $550-million in 2010.

In March 2011, China signed nearly $700-million in loan deals with Zimbabwe. Chinese vice premier,  Wang Qishang, who was in Harare for that signing, said that the loan included $100-million in direct aid to the Zimbabwean government.

At the time the opposition Movement for Democratic Change protested, saying Mugabe had mortgaged the country's mineral resources, including platinum in the Great Dyke and diamonds in the Marange fields, as part payment for the financial package.

'Shared political history'
Chinese companies operating in the country include Anjin, a joint diamond-mining venture between the Chinese and the Zimbabwe government in the Marange minefields. 

The Anhui Foreign Economic Construction Company is also spearheading two major construction projects — a mall and a hotel in Harare. Anhui built the multimillion-dollar Zimbabwe Defence College, which  opened last year. 

The Chinese ambassador to Zimbabwe, Lin Lin, said his country's "profound traditional friendship business" with Zimbabwe stemmed from a shared political history.

"More and more Chinese companies are involved in Zimbabwe's economic development. The two countries are also co-operating in other sectors such as education and culture."

The Chinese-owned company, Sino Hydro, recently won a tender valued at $1-billion to refurbish and expand the Hwange and Kariba power stations.

As the tobacco sales season gets underway this month, the Tobacco Industry and Marketing Board said it expected Chinese merchants, who have become key buyers of the country's tobacco, to play a pivotal role by offering high prices for the golden leaf. 

According to the board, Chinese buyers account for 40% of Zimbabwean tobacco, European markets for 35% and the rest is distributed elsewhere.

Anjin eyes blue-sky opportunity

China is to extend its influence on Zimbabwe’s economy beyond its dominance of diamond production at the Marange diamond fields as Chinese-owned Anjin Investments is poised to enter the country’s airline industry. 

A recent government gazette shows that Anjin has applied to the Civil Aviation Authority of Zimbabwe for a commercial licence. If Anjin enters the airline industry, it will compete with Air Zimbabwe, the official national airline. Air Zimbabwe is fighting liquidation and is saddled with a $100-million debt and a wage dispute with its 1 000 employees.

Air Zimbabwe offers only four weekly flights to Johannesburg at a "special rate" of $317 and is yet to resume its schedule for domestic flights.

Transport Minister Nicholas Goche was unavailable to comment on the progress of Anjin’s licence application and his personal assistant said that Goche was in South Africa attending to his sick child.

It is understood that alongside Anjin’s interest to take to the skies is another 

Chinese-linked company, Anhui Foreign Economic Construction Company. Anhui is already heavily involved in the local construction industry.

And Wilderness Safaris, a conservation company with interests in numerous Southern African countries, has applied for a commercial airline licence through its Zimbabwean arm to service domestic, regional and international routes. – Ray Ndlovu

Ray Ndlovu

Ray Ndlovu

Ray Ndlovu has been a correspondent for the Mail & Guardian in Zimbabwe since 2009. His areas of interest include politics and business. With a BSc honours degree in journalism and media studies, Ray aspires to become a media mogul.   Read more from Ray Ndlovu

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