‘Diplomatic missions should justify their existence’

21 Sep, 2014 - 06:09 0 Views
‘Diplomatic missions should justify their existence’ Firm commitment . . . Russia’s Foreign Minister, Mr Sergey Lavrov (left) congratulates President Mugabe, while Russia’s Minister of Industry and Commerce, Mr Denis Manturov (right), looks on following the commissioning of the Great Dyke Platinum project in Darwendale last Tuesday.

The Sunday Mail

Firm commitment . . . Russia’s Foreign Minister, Mr Sergey Lavrov (left) congratulates President Mugabe, while Russia’s Minister of Industry and Commerce, Mr Denis Manturov (right), looks on following the commissioning of the Great Dyke Platinum project in Darwendale last Tuesday.

Firm commitment . . . Russia’s Foreign Minister, Mr Sergey Lavrov (left) congratulates President Mugabe, while Russia’s Minister of Industry and Commerce, Mr Denis Manturov (right), looks on following the commissioning of the Great Dyke Platinum project in Darwendale last Tuesday.

Last week, a high-powered Russian delegation led by Foreign Minister Sergey Lavrov visited Zimbabwe to commission the Great Dyke Investments platinum project in Darwendale, and agree on other initiatives geared towards enhancing economic co-operation between the two countries. Our Senior Reporter Kuda Bwititi (KB) spoke to Zimbabwe’s Ambassador to Russia, Mr Boniface Chidyausiku (BC), about the US$3 billion deal and related matters. The following are excerpts.

KB: Can you sum up the outcome of the Russians’ visit?

BC: The visit by Minister Lavrov and the Russian Federation’s Minister of Industry and Trade, Mr Manturov, Deputy Minister of Foreign Affairs Mr Bogdanov, and Mr Mashitskiiy, the president of Vi Holdings, who are partners in the Darwendale platinum project, is very significant.

We had never had the Foreign Minister of the Russian Federation visiting Zimbabwe. This ups the level of our relations from purely political to a relationship that is now based on political history and economic relations.

Zimbabwe’s chief envoy to Russia, Ambassador Boniface Chidyausiku, speaks to The Sunday Mail

Zimbabwe’s chief envoy to Russia, Ambassador Boniface Chidyausiku, speaks to The Sunday Mail

KB: What is the commitment to the agreements, particularly the platinum deal?

BC: With regards to the Darwendale project, there is high commitment from the Russian government at the highest level. The consortium is made up of Vi Holdings, a private and emerging industrial company; the National Bank of Development, which is a state bank; and Russian Technologies, again a very important player in the Russian economy.

You would not find a better suitor than this consortium in spearheading the bilateral economic co-operation and investments in Zimbabwe. The success of what we signed hinges on implementation.

President (Vladmir) Putin is aware of this project and has given it his blessings, so has our President. This is a tall order for the implementers. They cannot fail to implement the project, which our two Heads of State firmly support and understand. It is incumbent upon all sides to fully implement this project so that the wishes of our two Heads of State can be fulfilled.

This requires faithful implementation of the agreements and also fulfilment by our Russian parties of what is required. In the first year of the project, we are doing exploration and the actual mining starts in the second year, then developing other infrastructure, smelting and concentrates in the third year.

So, there is a well-planned roadmap in terms of implementation. It’s not a shot in the dark.

KB: What level of funding has been put into the project so far?

BC: They are talking of investing about US$400 million in the initial stage, US$500 million in the second phase. I don’t have specific figures, but at the end of the day, we are talking about US$4 billion spread over the lifespan of the project.

KB: Have funds for the first phase been disbursed?

BC: They are already engaged in exploration. They have started funding. As you witnessed, activities around infrastructure, mining, the drilling of boreholes, findings to ascertain the amount of mineral ore, have already begun.

KB: Tell us about the Russian business culture.

BC: The Russians, like any businesspersons, go into business to make profit. There is no difference with the Chinese or Americans who go into business to make profit. The coming in of the Russian consortium is not charity. They want to make money.

It is incumbent upon the Zimbabwean side to find a way, as per agreement, to go into the project for mutual benefit. They make money, we make money. We have the resource, they have the money to invest. It’s a comprehensive relationship.

For us, as Zimbabwe, we are going into the project to help development, add money to the fiscus, create employment in addition to making money so that we improve the lives of our people.

KB: Do you foresee any bottlenecks in implementation?

BC: I am very optimistic about these projects. We are human. We have gone into these agreements and this is an agreement that has the blessing from the highest level.

I am sure the political will will overcome any bottlenecks in implementing this project. It is a must. I don’t see any failure or delay on this project. People are fired up to proceed and deliver on their promises. I have no doubt on the ability to fulfil obligations that we have agreed to.

KB: How did the initiative come about?

BC: There has always been an interest by Russians to invest in Zimbabwe. They have been looking for a project that would spearhead or be the main vehicle of this development.

The history of the Darwendale project dates back to 2006. There have been a number of impediments in between; but the Russians, having been one of the main pillars in terms of our liberation struggle, have always wanted to look for a business opportunity in Zimbabwe.

You find that last year Malawi was exporting more to Russia than us, but this has improved. I have been in Russia for the past three or so years and I have worked with both the government and the private sector to see how best we can attract investment into Zimbabwe.

This is a culmination of quite a process. In 2012, we were able to bring the Russian Minister of Industry and Trade to Zimbabwe and were also able to negotiate a Bilateral Investment Promotion and Protection Agreement with the Russians, which has now been ratified by both governments. This created an atmosphere where Russian companies developed confidence in Zimbabwe, knowing their investments are protected.

We also have been able to resuscitate the Zimbabwe/Russia Joint Commission, which was, again, first mooted in 2012.

(Foreign Affairs) Minister (Simbarashe) Mumbengegwi came to Russia in 2014 and we discussed issues regarding where we can have agreements and co-operation. When you have governments meeting, facilitating investment and trade, that works well for private sector.

KB: What opportunities can Zimbabweans exploit in Russia?

BC: The Russian government has banned agricultural products from the European Union. This creates a very good market for Zimbabwean products. So, as a nation, we need to identify our capacities, what we can provide. The Russians are willing to look at our products and see how we can further exchange them on the Russian market.

Russia is in winter seven months a year and imports the bulk of its vegetables. Zimbabwe also has a very good opportunity to export lemons, grape fruit and oranges to Russia. At the moment, Zimbabwean products such as oranges and other citrus fruits are being exported to Russia via South Africa. I think as we develop, we need to see how we can directly export our fruits to the Russian Federation.

Furthermore, the Russians are interested in importing tea and coffee from Zimbabwe. So, we need to resuscitate our production in these areas and establish firm markets in the Russian Federation. Initially, Russians were consumers of tea, but have developed a taste for coffee and it is in demand.

If we can improve our coffee production, we can as well identify an area where we can export that product to the Russian Federation. There are ongoing discussions between major coffee producers in Zimbabwe and Russian companies to see if what we produce is commensurate with their requirements.

Some of the coffee you find in Russia is from Zimbabwe via Europe. We want to establish direct trade between Zimbabwe and Russia.

KB: Who have the Russians talked to in Zimbabwe?

BC: They have been speaking to Tanganda. ZimTrade has facilitated visits by Russian companies, and we hope with Tanganda they can get into an agreement where Tanganda directly exports coffee to the Russian Federation.

KB: What other key areas of economic co-operation exist?

BC: A memorandum of understanding was signed between a Russian company called OMZ and the Zimbabwe Mining Development Corporation on the possibility of supplying mining equipment and other equipment Zimbabwean industries require. OMZ is a very big company which manufactures a whole range of equipment.

Russia has the equipment and finance, and Zimbabwe has the market. When (Finance) Minister (Patrick) Chinamasa and (Mines and Mining Development) Minister (Walter) Chidhakwa came to Russia, there was discussion on trade financing. Our biggest problem in Zimbabwe is we don’t have the cash.

I think this is a golden opportunity for Zimbabwe to import equipment from the Russian Federation. The Russian government has indicated that they are prepared to finance the importation of equipment we might need, and we should be able to pay back for what we purchase as we use the equipment to produce.

So, I think that is one of the key successes of the Joint Commission in addition to the inauguration of the platinum project.

Provision of trade finance is very key for us to realise some of our aims and goals in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation. We need equipment.

For instance, we are exploring gas reserves in the Gwayi area; the equipment they provide can be used to push this project.

KB: What are the intended benefits to the Zimbabwean economy? What are your targets?

BC: An investment project of this magnitude unlocks employment-creation in terms of mining and house construction. We can see Norton rising because there is great demand for housing. We can also see demand for power and mining contributing significantly to the fiscus in terms of royalties, taxes.

It’s a huge impact.

The coming on-stream of this project will increase Zimbabwe’s platinum production. Although we have large platinum reserves, we have not been able to realise our potential.

As you know, Zimplats and Unki are already operating. With this project, there is an advantage that the ore is not very deep (underground). So, we are starting with open cast. Other mining projects, for example, in South Africa, are mainly underground. So, it’s cheaper (to mine) in Zimbabwe than in South Africa.

I’m very excited about this project because it will uplift the economy to high levels if we implement it to the letter and spirit we agreed.

KB: Is there scope to immediately and directly address current liquidity challenges?

BC: The ZMDC/OMZ agreement provides for straight financing from VEB bank. There is now need to establish relationships between Russia banks and local banks so that whoever is funding can do so through a corresponding local bank.

This creates an opportunity for the Zimbabwean economy where our banks can create direct relationships with Russian banks. In essence, this will help address the liquidity challenges and bring new money into the country.

KB: We understand a number of Zimbabweans will be trained in Russia.

BC: An agreement where Russian universities will train Zimbabweans in mining and related fields has been signed. The figures and numbers I don’t have, but this is an addition to the existing scholarships. We have many Zimbabweans studying in Russia in medicine, metallurgy, accounting, journalism — you name it. This is a boost for Zimbabwe because human capital is very important for development. We have many of our citizens who want to further their education in the mining field and this is an opportunity. I also see this as a new dimension in investing companies coming into Zimbabwe and saying, “We want to train your nationals so that they can be part of the full engines of the growth in the mining sector.”

KB: Final words?

BC: I hope now that we have signed the agreement, we will implement the project to contribute to the improvement of the quality of our people’s lives. I believe that is what Zimbabwean diplomacy should be able to do: bring investors to Zimbabwe so that we can justify why we have diplomatic missions abroad. Diplomacy without the economic aspects of international trade and investment will not be productive. I hope we can do more through our diplomatic missions to improve the quality of our people’s lives and our economy, which greatly needs investment.

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