Government is failing to pay a long-standing US$50 million debt owed to a foreign mining company, and is instead seeking to have state mining company Zimbabwe Mining Development Corporation (ZMDC) use its assets to clear the bill. This has called into question the government’s “Open for Business” slogan that it has used to campaign for foreign investment.
The decade-old debt, owed to Amaplat Mauritius and Amari Nickel Holdings Zimbabwe, stems from a 2014 International Court of Arbitration award following the Zimbabwe Mining Development Corporation’s (ZMDC) cancellation of the companies’ platinum and nickel claims in 2010. The High Court in Zambia later confirmed this award. With interest, the total owed now exceeds US$73 million.
In 2019, the government had awarded Amari’s claims at Selous to Bravura, a company owned by Nigerian billionaire Benedict Peters.
In a meeting with Amaplat and Amari at State House in 2022, President Emmerson Mnangagwa assured company representatives that government would promptly settle the amount due, according to documents seen by newZWire. In that meeting were Finance Minister Mthuli Ncube and his Permanent Secretary George Guvamatanga, the then Attorney-General Prince Machaya, and John Mangudya, then RBZ governor.
However, two years on, the government has yet to pay.
It is unclear if the government’s initial eagerness to settle the debt was influenced by Machaya’s advice that the award constituted a “public debt” for the government. Classifying the award as a “public debt” significantly impacts the government as it becomes part of the country’s sovereign debt, guaranteed by central government. This debt must be accounted for in the national budget and affects the government’s creditworthiness and borrowing ability. Such a ruling, the government also fears, would create a precedence for other suits against Zimbabwean state firms.
“I am in agreement with the view of the ZMDC and the Ministry that the award falls under the definition of a public debt…Therefore, as a public entity its debts constitute public debt,” the A-G’s office wrote in a 2020 advisory note to the Ministry of Mines.
On April 25 this year, ZMDC wrote to the Public Debt Management Office pleading that the Amari debt be settled. ZMDC General Manager Blessed Chitambira said the easing of US sanctions was a chance for the parastatal to clean the slate.
Wrote Chitambira: “The de-escalation of sanctions has a positive effect on the Corporation and as such since the removal thereof, the Corporation is desirous to ensure that its image is not tarnished by failure to adhere to international arbitration awards that Zimbabwe is a signatory to.”
ZMDC proposed that the debt be settled by the government via Treasury bonds. However, the Ministry of Finance instead “proposed that ZMDC use its assets to settle the debt”, documents show. The government would lend US$49.4 million to ZMDC, which the corporation would pay back from earnings from its stakes in mining ventures, according to official correspondence.
Meanwhile, Amplat and Amari have initiated enforcement lawsuits in the US and Canada. Amaplat and Amari’s attorney, Steven K. Davidson of Steptoe LLP, stated that his clients “intend to pursue all lawful measures, in the United States and elsewhere, to collect on the judgment they have obtained and to collect that sum, plus interest, from all of the defendants, including Zimbabwe.” – (NewZWire)
