BY SHAME MAKOSHORI
A ZIMBABWEAN small scale gold miner has filed multiple international legal actions to reclaim swathes of Mashonaland East based lithium claims taken over by Chinese tycoons in December last year.
Fredrick Mubaira’s High Court battle to repossess gold and lithium fields at Goromonzi-based Arcadia Mine further exposes shocking laxity in mineral claims administration in Zimbabwe, where wrangles have swamped the legal system.
He is also suing the Ministry of Mines and Mining Development, the custodian of the country’s mineral resources.
Arcadia was taken over by Shanghai Stock Exchange listed Zhejiang Huayou in a surprise deal last December, which paid US$378 million to Prospect Lithium Zimbabwe (PLZ) to assume 87% shareholding.
The assets hold sway on the global lithium industry due to high grade ore, whose first samples have attracted international attention.
Lithium is a key raw material in the production of electric vehicle batteries.
Investment analysts said ultimately, Zhejiang Huayou, could pay up to US$420 million to assume full control should Zimbabweans in the project agree to relinquish their 13% shareholding in the business.
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It had looked calm ever since Australia quoted PLZ hived out its substantial stake to the powerful Chinese firm.
But a string of court applications filed in Harare and submitted to defendants in Zimbabwe, China and Australia in the past week have exposed fault lines in the transaction, which sent tongues wagging once it emerged foreign investors were parceling out Zimbabwean resources and earning fortunes.
Mubaira, a product of the national youth service who says he does not want to be seen “scuppering” President Mnangagwa’s “placement of mining at the centre of attaining Zimbabwe’s Vision 2030”, claimed in High Court papers filed last week that PLZ handed over the asset before concluding crucial negotiations that were taking place with him over the land.
As PLZ moved to lay out foundations for exploiting the resource in 2018, its representative in Zimbabwe, McCloud Nyasowa talked Mubaira into abandoning gold mining on the claims, the court papers said.
The agreement ended with Nyasowa paying a US$5 000 deposit to Mubaira after persuading him to move out.
PLZ was desperate to avoid controversy at the time, as it was scouting for investors.
High court papers said the parties later agreed on a US$55 000 settlement, which would see Mubaira transferring his land to PLZ.
PLZ also undertook to buy a house and a car for Mubaira, while paying school fees for his children.
The deal also involved PLZ allocating shares to Mubaira.
However, the parties agreed that Mubaira would be bought out once an investor was secured.
But at some point, disagreements emerged, which lawyers now say were motivated by the desire to take advantage of Mubaira’s financial situation and exploit him.
“Using a combination of economic duress, undue influence, cajoling and force, Mr Nyasowa drew up an agreement purporting that the purchase price was US$5 000 and that it had been paid,” Mubaira’s legal representatives, Mandizha & Company, said in letters sent to PLZ’s lawyers.
“He refused to give (our) client a copy assuring him that he would get one once all directors had signed.
“Using fraud, misrepresentation and the same tactics…all of which are reminiscent of the infamous Rudd Concession of 1888, Mr Nyasowa directed our client to lie on the transfer forms that the purchase price was US$5 000.”
Under pressure, PLZ later paid Mubaira US$8 415, instead of the agreed US$55 000, court documents showed.
However, Mubaira is said to have stormed PLZ offices, after which an executive directed staff to “treat him to tea and biscuits” while a fresh ‘Rudd Concession’ was being drafted, the lawyers said.
After getting wind that Zhejiang Huayou was coming into the picture, Mubaira confronted PLZ again, but he was “dismissed off hand with the retort that PLZ’s lawyers would deal with whatever claim” he would bring up.
In their letter to the Chinese firm, Mubaira’s lawyers warned that Zhejiang’s interests would be at stake unless the deadlock over settlement was addressed.
“Our client is the legal owner of a mining block situated on his farm, Lowfield in Acturus,” Mubaira’s lawyers wrote in a letter sent to Zhejiang Huayou dated March 23, 2022.
“Our client contends he was defrauded of his aforesaid legal interest by PLZ.
“Our client became aware of a contract you entered into, and are in the process of consummating with PLZ.
“His contention is that to the extent that the subject matter for which you contracted with PLZ contains his mining interests, you were unknowingly and fraudulently dragged into a fraud.
“In our law, and we believe certainly in your own jurisdiction too, fraudulent contracts cannot birth legal and commercially enforceable contracts.
“Our professional and courteous attempts to seek dialogue with your local partners have been rebuffed.
“It seems to us that your local partners consider our client’s claim to be baseless.
“In fact, they are on record accusing him of being a fraudster and extortionist.
“The practice in Zimbabwe is that before litigation, a claimant should give his adversary an opportunity to reply.
“While we are ready to file a claim against you and your local partners, it is only fair that we draw your attention to facts that our client believes were deliberately withheld from you.
“We are obviously aware of what effect such disclosure/s have on your own contract with PLZ.
“Our client’s brief to us is for us to recover his mining interest from whoever is laying claim to it, which bracket we believe you belong…the courtesy extend to you herein is not a sign of weakness on our client’s part,” Mubaira’s lawyers wrote to Zhejiang Huayou.
“Sometime in July or August 2018, geologists from PLZ sought and obtained permission to prospect on our client’s farm (Lowfield), for lithium,” Mandizha & Company wrote in another letter to PLZ lawyers, Manokore Attorneys.
“Our client is the registered owner of a gold mining block on the said farm.”
The Zhejiang/PLZ transaction was subject to a series of regulatory approvals in Zimbabwe and China, although relations between the two countries mean that this could be a done deal.
Zimbabwe has benefitted from big Chinese investments in the past two decades, which have kept the southern African country running during a tough time when foreign direct investment plummeted in the aftermath of hard-hitting western sanctions on Harare.
The massive push by Chinese investors into Zimbabwe’s multibillion dollar lithium mines has raised fresh fears of plunder with a leading resource campaigner pushing for stronger parliamentary oversight.
The Zimbabwe Coalition for Debt and Development (Zimcodd)’s red flags were raised recently after it became clear that the government was pushing ahead, parcelling out strategic assets to foreign firms without giving legislators room to assess such transactions.
In the past three months, Chinese firms have announced two deals worth a combined US$558 million to take over lithium mines in Harare and Masvingo, as the rush to control entire the value chain escalates.
Lithium is a key raw materials in electric vehicles (EV) production, and China is the world’s biggest manufacturer.
In the Zhejiang deal, Zimbabwe will pocket only US$30 million in taxes, with the rest of the funds going to foreigners.
Sinomine Resource Group Co. Ltd (SRGCL) is taking over Bikita Minerals for US$180 million, becoming the second Chinese outfit to make inroads into the sector.
In December, “There is a concern around mining deals in Zimbabwe because there is a huge lack of exploration and geological survey data by the government,” Zimcodd said in recently.
“Minerals like lithium are strategic resources the country should leverage so that all citizens, born and unborn enjoy value.
“The undertaking of exploration gives bargaining power in the conclusion of these mining deals.
“It is also concerning to note that the deals involving strategic assets are also being concluded without the oversight of the people through the Parliament.
“Zimcodd believes that Parliament should take an active role to safeguard natural resources since it stands for the people through representative democracy.”
