Xuzhou Construction Machinery Group provides $100 million supplier credit to Zimbabwe Mining Development Corporation (ZMDC) for provision of small scale mining equipment

Project narrative

In 2014, Xuzhou Construction Machinery Group (XCMG Group) signed a $100 million supplier credit facility agreement with Zimbabwe Mining Development Corporation (ZMDC) for the provision of small scale mining equipment on credit. XCMG Group is a Chinese multinational state-owned heavy machinery manufacturing company with headquarters in Xuzhou, Jiangsu. ZMDC is a state-owned mining company in Zimbabwe. This loan has a 3 year maturity and a 4.5% interest rate. Zimbabwe’s Ministry of Finance and Economic Development issued a sovereign guarantee for this loan on December 8, 2014, making it a contingent liability of the Government of Zimbabwe. In order to finance its supplier credit agreement with Zimbabwe Mining Development Corporation (ZMDC), XCMG Group of China secured a $100 million loan from China Development Bank (insured by Sinosure). The USD 100 million was put into the Zimbabwean government's Gold Development Fund (or Gold Development Initiative Fund), increasing the size of the fund to USD 150 million. The purpose of the fund is to facilitate the acquisition of equipment aimed at building the capacity of small-scale gold miners to increase gold output from the sector. The intended beneficiaries are small scale miners in gold, chrome, and tantalite minerals. The project was in abeyance for several years due to delays by the Government of Zimbabwe to issue a sovereign guarantee for the loan. Approximately $5 million worth of equipment from the facility arranged by XCMG with China Development Bank was handed over to miners in April 2017. There are also indications that another drawdown was made sometime in 2018 (see staff comments).