Zimbabwe signed a US$4.2-billion deal with Cyprus-based Karo Resources to develop a platinum mine and refinery on Thursday (March 22).
The first output of platinum-group metals is expected in 2020, but work will start in July, Mines Minister Winston Chitando said. The mine is forecast to produce 1.4 million ounces annually within three years.
“Zimbabwe is open for business and whoever stands in the way, hurting business in this country, will fall. It is not business as usual anymore, things have to change,” President Emmerson Mnangagwa said.
The deal with Karo Resources, a company linked to mining entrepreneur Loucas Pouroulis, is the largest to date in Zimbabwe’s mining industry.
In fact, foreign investment stalled during the last years of Robert Mugabe’s rule. “The landscape of Zimbabwe’s mining industry will never be the same,” Chitando added.
The project, which will be located in the Mhondoro-Ngezi platinum belt, will include a coal mine and a power station to produce electricity for the smelter. Zimbabwe is the world’s third-largest platinum-producing country.
Security of tenure and the outlook for platinum demand will be key to the success of Karo’s project, Ross Harvey, a mining analyst at the South African Institute of International Affairs, told Bloomberg.
“Zimbabwe’s geology is unrivaled,” Harvey said by phone from Cape Town. “While six months ago you would have struggled to talk that kind of capital, investors have a short political memory.”
On Monday (March 19), Zimbabwe changed its empowerment law to limit majority ownership by state entities in mining projects in a move to attract more foreign investment to the country. However, platinum and diamond mines were not included in the revised law.
Chitando said Karo Resources is expected to comply with the empowerment law by giving up majority ownership in the project, but did not elaborate.
On Thursday, platinum prices fell 0.5 percent to US$949.90 per ounce after touching a one-week high of US$963.60.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.