Foreign loans that use minerals as collateral may complicate Zimbabwe’s future negotiations with foreign creditors to restructure its $8.8 billion debt, an International Monetary Fund official said on Monday.

Unable to get funding from lenders like the IMF since defaulting on its debt in 1999, Zimbabwe has over the last five years relied on the African Export and Import Bank (Afreximbank) for mineral-backed loans. But the country still faces a dollar crunch that has led to shortages of fuel and medicines.

Zimbabwe remains in debt distress, said Gene Leon, the IMF mission chief to Zimbabwe. Its $2.6 billion arrears to the World Bank, African Development Bank and European Investment Bank prevent access to new funds from multilateral lenders.

“In this context, the government has contracted external loans on commercial terms that are collateralized by mineral exports,” Leon said in emailed responses to Reuters.

“While these loans can help the authorities in responding to the economic and humanitarian crisis that is unfolding, they may also complicate future negotiations with external creditors to restore debt sustainability.”

Leon said Zimbabwe’s projections of economic growth would probably be revised in the short term because of drought and a cyclone that battered the eastern regions. The IMF forecasts the economy will shrink by 2.1 percent this year.

President Emmerson Mnangagwa, who came to power after a coup toppled Robert Mugabe in November 2017, has made clearing foreign arrears a top priority. His government has agreed an IMF staff programme it hopes will help pay off multilateral lenders and Paris Club creditors next year.

The central bank, which has previously said it borrowed $985 million from African lenders last year, said on May 19 it had secured $500 million from unnamed international banks. Treasury officials said the money was from Afreximbank.

That loan included $100 million bridging finance in February, two treasury sources said, adding that some of the money was used to buy fuel and make “token” payments to South Africa and Mozambique for past electricity imports.

Gene told Reuters that implementing fiscal and monetary policy reforms, including the removal of exchange restrictions to stabilise the exchange rate and inflation, would be hard without external funding and after a severe drought.

At 75.86% in April, Zimbabwe’s inflation is still nowhere near the 500 billion% reached during the hyperinflation era of 2008. But the consumer price index is at its highest in a decade and eroding incomes and savings.

Zimbabwe increased the price of fuel by nearly half last month, the second increase since January, angering citizens battling with soaring prices of basic goods.

As inflation soars, the new RTGS dollar that was introduced in February continues to weaken. The currency was trading at 8 to the dollar on the black market compared with 5.52 on the official interbank market.

The local currency has now depreciated by 91% on the black market and 121% on the official market since its introduction._Reuters

Afrochine Smelting is a subsidiary of Tsingshan Iron and Steel Group of China and has chrome smelters in Selous near Chegutu.

Chrome mining and smelting company, Afrochine Smelting, has been taken to the High Court by NR Barber (Private) Ltd, for allegedly unlawfully removing its chrome ore worth US$7 million.

Afrochine Smelting is a subsidiary of Tsingshan Iron and Steel Group of China and has chrome smelters in Selous near Chegutu.

It is being sued alongside Diamond Cement (Pvt) Ltd and Wonder Mavengano for the unlawful removal of 109 950,86 tonnes worth US$70 per tonne.

“The total quantity of the ore unlawfully removed is 109 950,86 tonnes whose value is claimed at the market value rate at date of summons being US$70 per tonne,” NR Barber, which is under judicial management, said in court papers.

According to NR Barber, the cited defendants in the matter professes to carry on the business of prospecting for mining and trading in minerals and mineral ores in the country, but at all material times, ownership of all ore extracted within NR Barber’s blocks belonged to the company.

“None of the defendants (Afrochine Smelting, Diamond Cement and Mavengano) has any right to enter upon the site of the claim or any right to the ore won from the claim,” NR Barber said.

“Sometime between 2016 and December 2018, the defendants wrongfully and unlawfully entered upon the location of Mzila 6 Mine claim and without plaintiff’s consent, approval or knowledge took several consignments of chrome ore extracted from the said claim,” the firm said.

“The acts of the first, second and third defendants were illegal and defendants had no right at law to act in the manner they did and must each be held jointly and severally liable, compensating the plaintiff for the loss suffered as a result of the unlawful removal of its chrome.”

NR Barber is being represented by Mafongonya and Matapura Legal._NewsDay

Bravura Consortium will spend more than $50 million to explore for and mine platinum in Zimbabwe, the Southern African country’s mines minister said on Friday, after both parties signed the agreement.

Zimbabwe is seeking to quickly exploit its reserves of platinum, which is in growing demand for use in catalytic converters to limit emissions as car manufacturers shift to making electric cars powered by lithium batteries._Reuters

Mystery surrounds the distribution of fuel in Zimbabwe after authorities have established that while enough money has been availed for players to procure the product, it has not been channelled to the market resulting in incessant countrywide shortages.

It has also emerged that for the month of June, the Reserve Bank of Zimbabwe (RBZ) released letters of credit for the acqusition of some 170 million litres against a national requirement of 140 million, raising serious questions about the leakages in the industry.

This came out after Energy and Power Development Minister Advocate Fortune Chasi and Reserve Bank of Zimbabwe Governor, Dr John Mangudya met fuel players in Harare yesterday and told them that new measures to curtail leakages in the fuel supply system will be instituted.

He said the measures were expected to instill discipline in industry players and plug leakages amid indications that the Reserve Bank of Zimbabwe has made provision to acquire 170 million litres of fuel for next month against a requirement of 130 million litres.

“I was in a meeting with players from the fuel industry and this is the second time that I am meeting them since I was appointed. The meeting was occasioned by the queues that we are seeing at the service stations throughout the country.

“The meeting was attended by the Reserve Bank Governor Dr John Mangudya and his staff and I made it very clear that licences are issued when the regulator is satisfied that it’s in the national interest. And so when people begin to misbehave, as we understand from the public because I have been inundated by many complaints from the public, we act,” he said.

“This has occasioned untold suffering on the driving public and as Government we are there to protect the national interests. We are there to make sure that fuel is distributed rationally throughout the country.” 

He said he made it very clear during the meeting that this strong element of dishonesty will not be tolerated by Government.

“We have agreed with the industry that all service stations will be wet today (yesterday). So we are expecting that there will be some movements, significant movement around the issue of availability of fuel.

“I also mentioned that I have just completed work on regulations around penalties for misbehaviour and those regulations will be sent to the Attorney General for examination and finalisation. We expect them to come into force pretty soon. We need order in this industry.

“I pointed that in order to enhance availability of information to the public, I will be publicising, who received what amount of fuel and when, so there is nowhere to hide.

Minister Chasi also indicated that they had set up task forces to investigate misconduct by some service stations that are responsible for diverting fuel to the parallel market.

“We learnt that depots are also part of the cause of the problem, fuel is escaping through those depots and we are going to investigate on that,” he told the Parly committee after he had been asked what he was doing to end fuel queues.

Dr Mangudya told the same committee that investigations were necessary since the country was procuring more than enough fuel every month.

“As of now we have letters of credit worth 170 million litres of fuel for the coming month against 130 million litres required by the nation for the same period,” he said.

He assured the committee that the central bank will always avail funds to procure adequate fuel every month. 

On fuel pricing, Minister Chasi said the industry pointed out that there was instability in terms of some of the templates that were being used to determine fuel prices.

“I have asked them to go and develop that position, giving us facts and figures. We are due to meet them the week after next, on Thursday so that we can develop the issue they have raised.

Minister Chasi said the Zimbabwe Energy Regulatory Authority (ZERA) last week announced the fuel price and it had not changed.

Last week ZERA gazetted new maximum retail prices of fuel reflecting average increases of 46 percent for blend petrol and 49 percent for diesel.

ZERA said the new prices were premised on the interbank market rate and will see a litre of blend petrol (E10) retailing at $4,97 while diesel will sell at $4,89 per litre.

ZERA said the new prices were in line with measures taken by the RBZ on fuel procurement, now based on the ruling exchange rate on interbank market where oil marketers now obtain forex to import fuel.

The country has been facing intermittent fuel shortages as a result of a shortage of foreign currency and activities of dealers who are working in connivance with people in the fuel industry especially attendants who have been accused of diverting fuel to the black market._The Chronicle