Fool’s Mine: How a Chinese mining death exposed Zimbabwe’s lax laws

A short drive outside Zimbabwe’s second-largest city, a dusty road leads to a potentially lucrative gold mine at the centre of a protracted legal dispute over its name, who owns it, and revenue possibly owed to the government.
The fight over Fool’s Mine, situated at Hope Fountain Milling Centre, exemplifies the scramble for the Zimbabwe’s untapped mineral resources and the government’s failure to properly regulate the mining sector as it desperately tries to attract more foreign investment.
The country sits on some of the region’s largest deposits of gold, copper, lithium, coal, nickel and diamonds.
Western companies scaled back their interests in Zimbabwe in recent decades under sanctions against the government of former President Robert Mugabe.
By 2015, China had emerged as the largest source of foreign direct investment, accounting for 74% of total investment inflows, according to the Centre for Natural Resource Governance, a Zimbabwean research and advocacy group.
An influx of Chinese companies into the mining sector, many of them unknowns, has led to increased tensions between investors and local communities, mainly over environmental damage and labour practices.
Fool’s Mine epitomises many of the problems in the sector.
Conflict over Fool’s Mine flared after its owner, Shuixing Xu, a Chinese businessman, was allegedly poisoned and returned to China in critical condition before passing away three days later in February 2021.
The dispute now before courts involves Shuixing Xu’s son, Chinese shareholders who said shares in the mine were owed to them, and local entities who put the mine under corporate rescue, according to court documents and interviews with lawyers representing the parties.
Court documents reviewed by CITE show that one of the main shareholders, Zhiyuwan Wang, tried to change the name of the mine, which he said was “undesirable” for a business establishment, but failed to notify the Zimbabwean government of the name change to Sheng A Mine.
He also allegedly sold 60 percent of the shares via a Chinese bank for over $13 million, the court documents show.
Byron Sengweni, a lawyer for Zhiyuwan, told CITE that a court still had to rule on a complaint by the Chinese investors against Fool’s Mine management and a corporate rescue practitioner for allegedly fraudulently placing the mine under corporate rescue.
The mine halted operations in 2021 after its mining license expired, but court documents show that Chinese investors illegally resumed mining a year later. Then in February 2024, a mine worker died, which exposed the illegal mining operations and brought a police investigation of the death.
At Fool’s Mine, old scrap metal that serves as a fence around the premises and rusting equipment inside are the only signs of what its developers hoped would be a major mining operation.
Experts argue that troubles at Fool’s Mine could have been avoided if Zimbabwe’s 1961 Mines and Minerals Act had been updated to better deal with changes in the industry, vested interests, and legal disputes.
The country’s Minister of Home Affairs Kazembe Kazembe has estimated the country loses $1.2 billion a year due to gold smuggling.
Farai Maguwu, director for the Centre for Natural Resource Governance (CNRG), said the government was dragging its heels on updating mining legislation because it would expose the entrenched interests in the sector.
“The government appears uninterested in addressing issues of environmental crimes and theft of minerals because … Zimbabweans are participating,” Maguwu said. “Zimbabweans are working in cahoots with the Chinese to ensure that the minerals do not pay the required revenue or that there is falsification of the quantity and quality of the minerals.”
Zimbabwe’s long-ruling ZANU-PF government denies all these charges, accusing Maguwu and other critics of running a relentless xenophobic propaganda war against Chinese investors, with sponsorship from some Western powers.
Precious Luphahla from the Zimbabwe Coalition on Debt and Development (ZIMCODD) said losses in mining revenue through illicit financial flows (IFFs) — such as corruption, tax evasion and theft — have hindered economic growth and stability in Zimbabwe.
“This has resulted in the government resorting to borrowing money, ballooning public debt in Zimbabwe,” she said.
“IFFs have also resulted in rising levels of inequality,” she said, adding that any benefits from mining revenues failed to trickle down to the poorest, or bolster investments in education and health.
Stevenson Dlamini, an economist and lecturer at the National University of Science and Technology (NUST), said rampant corruption and smuggling in the mining sector discouraged foreign direct investment. Tackling IFFs would help transform the sector and attract high- net- worth investors who would improve the sector’s viability, he added.
“It would also mean higher revenue collection for the government,” Dlamini said. “The country is currently struggling to service its external debt, which is largely tied to the mining sector, but a reduction in IFFs would expedite the repayment of the debt obligations and free up resources for the improvement of the welfare of the citizens of Zimbabwe.”
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