Zimbabwe’s Biggest Platinum Project Has New Challenges - Report
Zimbabwe’s biggest platinum project, Darwendale, struggling to get off the ground for the past two years, has new challenges, Bloomberg reports.
It is reported that a major stake held by a Russian tycoon is scaring off potential financiers for the $3 billion mine.
According to a report by Zimbabwe’s Centre for Natural Resource Governance, initial development work on the Darwendale deposit began in early 2020, but operations at the project were soon halted because of a lack of capital.
The site has been abandoned since early last year.
Vitaliy Machitskiy’s Vi Holding, which has a 50% stake, is reportedly reluctant to continue investing after years of delays asking not to be identified as the talks aren’t public.
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But Kuvimba Mining House Ltd., which owns 50% of the project and which the government says it controls, has been unable to attract fresh investment because European platinum buyers don’t want to enter into purchase agreements with an entity with Russian shareholders.
The fear of running up against sanctions stemming from Moscow’s invasion of Ukraine means it’s also harder to borrow money to develop the project.
Simba Chinyemba, Kuvimba’s chief executive officer told Bloomberg that the Darwendale project is “ongoing” and the mine plan is being remodelled. He added:
What I can tell you for a fact is that the project is going ahead.
Kuvimba and VI Holding each hold half of Great Dyke Investments Ltd., which owns the Darwendale deposit.
Darwendale brief history:
a). Darwendale has been tied to Russia since 2006, when former Zimbabwe president, Robert Mugabe, took the concession from a local unit of South Africa’s Impala Platinum Holdings Ltd. and handed it to Russian investors.
b). The first venture to try and tap the deposit was named Ruschrome Mining which included a state-owned mining company, the Zimbabwe Mining Development Corp., Russian defense conglomerate Rostec, Vnesheconombank and Vi Holding.
c). The venture later became Great Dyke, and Vi Holding remained the sole investor from Russia.
d). Machitskiy, who was born in Irkutsk in Siberia, is a childhood friend of Sergey Chemezov, chief executive of Rostec and close ally of President Vladimir Putin, with whom he once worked in Germany. Chemezov is sanctioned by the US, EU and UK.
Darwendale, if built, could potentially produce 860 000 ounces of platinum group metals a year and the deposit could be exploited for four decades, Great Dyke has said.
Output was initially expected to begin in 2021, but there are more challenges in addition to Russian links and a lack of capital.
i). Zimbabwe’s government says it controls Kuvimba, but its assets, including the stake in Great Dyke, are the same as those owned until at least late 2020 by Sotic International Ltd., a company linked to Kudakwashe Tagwirei.
Tagwirei is sanctioned by the US and UK governments over corruption allegations.
ii). The government hasn’t said how it acquired the assets or disclosed the identities of the private shareholders who own the 35% of Kuvimba not held by the state.
iii). Impala snubbed an approach from Great Dyke because it was concerned about its ownership, people familiar with the situation said in February.
iv). That opacity of its ownership has also complicated relations between Great Dyke’s shareholders.
v). The Centre for Natural Resource Governances said the project has also been hampered by “mismanagement and mistrust,”.