03 February 2014
CCS COMMENTARY:
Chinese engagement in the Zimbabwean mining sector
Zimbabwe, as many African countries, is endowed with natural resources, of which gold and
diamonds are the most abundant. Gold panning has historically been the main income opportunity
for many Zimbabweans. However, due to the economic downturn of the last decade (2003-2013),
Zimbabwe has seen an increase in illegal gold panning as an alternative means of employment.
Gold panning is a labour intensive industry at best, but when it is not formalised and regulated, the
consequences for both mine workers and the surrounding environment can be rather devastating.
In addition to health and safety hazards and police actions against them, Zimbabweans involved in
gold mining, whether legal or illegal have also been faced with competition from foreign
companies investing in Zimbabwe’s gold mining sector, most notably Chinese companies.
Chinese investment in mining is found both in large-scale, formal
operations and in small-scale, informal mining business. In
Zimbabwe, China is ranked fourth in terms of the scale of mining
investments approved by the Zimbabwe Investment Authority (ZIA)
in 2009, after the British Virgin Islands (a financial offshore
destination), Mauritius (also used for financial offshore business),
and South Africa. Chinese investors in Zimbabwe could be large
corporate investors who come in the form of government-togovernment arrangements, or it could be small investors who come
Image source: www.sina.com
through the Zimbabwe Investment Authority (ZIA), without any
Chinese government political and economic support. The biggest Chinese investor in the Zimbabwean
diamond sector is Anjin Investments, which invested US$ 460 million in 2011. This investment is geared
into the Marange diamond fields, and the main players are Anjin investment and Zimbabwe Mining
Development Co-operation.
African countries like Zimbabwe have certainly benefited from Chinese investments to support their ailing
economies. These developments, however, are taking place amidst growing discontent with alleged
Chinese human rights abuses across a number of African countries. Media reports and civil society
research have exposed human rights abuses and labour violations elsewhere, for instance in Zambia.
These challenges are intertwined with issues pertaining to lack of good governance, illegal mining,
artisanal (small-scale) mining, health and safety and so forth. Chinese engagement is not the only cause for
concern or the only issue in mining. Rather, Chinese illegal mining exacerbates existing problems. The
critical question is: what is the government of Zimbabwe’s response to these challenges?
Artisanal and informal mining
Times Live reported in January 2014 that the Zimbabwean government has proposed the formalisation of
informal mining operations, claiming that this would reduce the risks to miners, both in terms of safety
and their legal status. The fledgling overall economic situation of the country has prompted the
formulation of a number of legislations that Zimbabwe has adopted, such as the Indigenization and
Economic Empowerment Act 2007. Chapter 14:33 of this legislation aims “to provide for supportive
measures for the economic empowerment of indigenous Zimbabweans” and “to increase, enhance and
facilitate the involvement and participation in the national economy of indigenous Zimbabweans” 1. Civil
society in Zimbabwe and international commentators have raised concerns about the implementation of
this legislation, asserting that the focus has been on the acquisition of 51 per cent shares in foreign owned
companies. However, there are few capable companies whose indigenisation will have an impact on the
average Zimbabwean citizen.
Mining as a governance challenge – the Ghanaian example
Besides Zimbabwe, Ghana for instance has seen a dramatic increase of illegal Chinese gold miners over the
past five years. While Ghana has a legal framework for mining in place, the levels of corruption among
government officials have made it easier for illegal mining to flourish. Ghana’s legal framework has been
reviewed in 2006 and it includes the law on small-scale mining and the law on the promotion of
investment; the latter governing foreign investors. Nevertheless, due to high levels of corruption among
government officials, weak legal frameworks and the growing presence of informal channels of trade,
foreign miners have increasingly been exploiting Ghana’s gold resources by obtaining small-scale mining
permits from local miners and corrupt officials.
However, the Ghanaian government put in place measures aimed at minimizing, if not completely
eliminating, illegal gold mining. Growing dissatisfaction among Ghana’s local populations with Chinese
mining activities and their environmental effects led to calls for an end to the plunder of Ghana’s
resources without legal exploration licences. The Ghanaian government’s crackdown on illegal miners
resulted in the deportation of more than 4500 Chinese citizens between June and July 2013.
What Zimbabwe should do
Without proper implementation of laws and regulations (and their continuous monitoring and
evaluation), illegal mining will continue to pose a problem on national level, also in Zimbabwe. The issue
of institutional capacity in Zimbabwe is still a challenge. This has led to instances where Chinese investors,
not least so in the Zimbabwean mining sector, appear to use political channels. These channels are
deemed more apt to help secure their investments than adhering to legal requirements. Addressing this
matter only seems possible if the Zimbabwean government establishes independent and credible public
institutions ensuring that investments are benefitting ordinary citizens not only the political elite. For
instance, researchers have argued that in order to address challenges pertaining to artisanal mining, there
should be a recapitalisation of Reserve Bank of Zimbabwe (RBZ) and the Minerals Marketing Corporation
of Zimbabwe (MMCZ) – to offer competitive prices for diamonds from artisanal miners. This could en
courage miners and diggers to participate in the formal economy.
While it is deplorable that investors are seeking (illegal) shortcuts for their activities, solutions have to be
crafted by Zimbabweans themselves, in co-operation also with neighbouring countries to crack down on
cross-border smuggling and trade. The Chinese government also has a responsibility to ensure that its
investors comply with the legal framework in Zimbabwe by crafting their own legislation on international
investment regulation. It is crucial that Zimbabwe’s mineral resources be viewed as a vehicle for
sustainable socio-economic development in the long term. Changing incentive structures might be a way.
(1 Indigenization and Economic Empowerment Act, (2007) Chapter 14:33)
Nuša Tukić
Research Affiliate
Centre for Chinese Studies
Stellenbosch University
Tobela Tapula
Research Analyst
Centre for Chinese Studies
Stellenbosch University
The Centre for Chinese Studies (CCS) at Stellenbosch University is the leading African research institution
for innovative and policy relevant analysis of the relations between China and Africa.
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