China comes down hard on errant companies

Tichaona Zindoga

The Embassy of China in Harare says it supports the halting of operations of a Chinese company that intended to carry out quarry mining in Zimbabwe’s easterncity of Mutare, Review & Mail can exclusively reveal.


The Embassy said it believed the company, Freestone Mines should leave Zimbabwe because it did not carry a satisfactory profile to operate in the country according to China’s high standards.
This a clear show of China’s strong intent to stop actions of a few companies, mostly small privately-run businesses, that were stoking diplomatic and community tensions in Zimbabwe through errors of
commission or omission.


With reports of a plot by some Western countries to sponsor negative media coverage of Chinese companies in Zimbabwe as well as civil society and political agitation against Chinese investments, it
is understood that China will not allow a few “bad apples” among Chinese investors to “hurt the excellent bilateral cooperation” that has been going on between Zimbabwe and China for years.
Hundreds of Chinese companies operate in Zimbabwe across different sectors of the economy, making it the largest foreign investor, but these companies vary from big, State-linked enterprises that
have been mostly implementing bilateral projects and private businesses some of which are listed on stock exchanges globally.

The lowest tier is however occupied by small, privately-run businesses, and it is this category that has worried officials because of poor practices that have often been used to justify attacking
Chinese companies in general.


Some conflicts with workers and communities have been attributed to cultural differences.
It is understood that for a long time, the embassy of China told Zimbabwean authorities to come down harder on Chinese companies involved in misdemeanors, corruption and other ills but
was also worried about the relatively lax standards in monitoring and supervising
operations of companies.


And recently, China decided to act decisively on Freestone Mines, whose activities in Mutare attracted spirited protests from local residents, civil society and pressure groups after it sought to commence a quarry project.


In a briefing last week, a diplomat at the Embassy of China in Harare revealed why Beijing, represented by Ambassador Guo SHaochun, had to act.


“After our own investigations, we discovered that the project’s point of blasting was too close to the community’s water source and that the project itself was too close to residential areas and potentially
caused environmental damage,” the diplomat said.


“We found out it was not a good investment and strongly suggested the company’s withdrawal and cancellation of this project as it does not meet standards for high quality investment in Zimbabwe,”
the diplomat explained


It is understood China is also keenly looking forward to stronger regulatory practices on the part of Zimbabwean authorities at various levels, which Beijing sees as the right way to protect investors
from attacks.


Sources close to the developments told Review & Mail that despite coming hard on Freestone Mines, China also recognised that the company was also a victim of circumstances, and not solely to
blame for the imbroglio.


“This company is also a victim to some extent because they got a bid which the Mutare City Council advertised for investors and they signed a contract with the local authority for mutual cooperation,” a source averred.


“The local authority should have done its due diligence so as to protect the investor. Although the Embassy came hard on the investor it considers both parties as responsible and they should have been
successful if they had done things differently, but they failed. It is regrettable,” the source said.


On Friday, Freestone Mines through their legal practitioners, Mushoriwa Pasi Corporate Attorneys, wrote to Mutare City Council notifying the local authority of their decision to cancel the lease agreement.

According to a memo circulated by the local authority, Freestone Mines canceled the lease agreement citing “resistance from different individuals and stakeholders who are totally against the
project”.


The decision was immediately welcomed by residents and civil society organizations that had campaigned hard against the project.

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