15 February 2019

Zimbabwe: Africa Money to Bankroll U.S.$3 Billion Russian Deal

Photo: The Herald
Zimbabwe's Mines Minister Winston Chitando (file photo).

A U.S.$3 billion platinum deal between Zimbabwe and Russia is now mired in controversy after it emerged this week that the funding for the project will come from African Export-Import Bank (Afreximbank) institutions and African Finance Corporation.

Sources in the mining sector told businessdigest this week that the platinum mining venture will not be financed by Russian capital.

According to sources, government entered into a memoranda of understanding between Afreximbank and Great Dyke Investments (Pvt) Ltd concerning the Darwendale Platinum Group Metals Project in Zimbabwe.

Another memorandum of understanding was signed between the African Finance Corporation and Great Dyke Investments (Pvt) Ltd for the Darwendale Platinum Mining Project.

"This deal is going to be funded by African money. All this talk about Russia financing this deal is just propaganda. The question we ought to ask is obviously around whether Zimbabwe needs Russia to get funding on this particular deal," a source said. "Government has basically given away platinum rights to the Russians for no monetary value."

The disclosures have brought into question Russia's contribution to the deal.

Sources say government could have gotten funding from Afreximbank and African Finance Corporation.

Great Dyke Investments chairperson Hesphina Rukato said she expected financial closure on the deal by June.

"Working financial closure is expected to be in June and then we expect construction is going to start in July," Rukato said before requesting questions in writing last week.

At the time of going to print, Rukato had not responded to enquiries sent to her via email last week.

Rukato accompanied President Emmerson Mnangagwa on a trip to Russia last month that saw the signing of the controversial deal.

In a report back on Mnangagwa's state visit to Russia, Belarus, Azerbaijan and Kazakhstan last month, Information minister Monica Mutsvangwa confirmed agreements had been signed with Afreximbank and Africa Finance Corporation but did not elaborate on the actual details.

Mines minister Winston Chitando confirmed agreements with the two financial institutions had been signed, but said he did not have specifics on the deal.

"I don't have actual specifics but I know that Great Dyke entered into an agreement with the financiers and they have two separate agreements. You would need specifics from Dr Rukato," he said.

Asked what the Russians were bringing to the table, he said he did not have actual details of the deals.

"There is no project, especially one of this size, that can be funded only by equity. Such a venture would require a combination of equity and capital. I don't have the actual numbers, but projects that size normally require debt financing," Chitando said.

Additional efforts to seek a comment from Rukato were fruitless yesterday as she claimed to have been travelling since last week.

"I will get the team to look into them today as I have been travelling," she said.

Great Dyke Investments is a joint venture company between the Russians and Zimbabweans in the Darwendale platinum project.

Pen East Investments and Russia's JCS Afronet are said to have commissioned the platinum mining project in 2014 but to date the deal has not moved an inch.

The project is expected to haul at least one million ounces of platinum per annum.

At least 15 000 jobs are expected to be created when the company starts operating at full capacity.

Large-scale exploration works at the Darwendale deposit commenced in January 2015.

GDI had planned to drill over 300 000 running metres, making it one of the biggest exploration ventures in Zimbabwe.

The scope of work was designed to prove the deposit resources in indicated category for longer than a 20-year mining period. The Darwendale deposit resources have been estimated at 40 million ounces of platinum group metals (PGMs).

The initial scope of the project entailed the phased construction of a complex for mining and concentration of 10 million tonnes of ore per annum, and a smelter to enable production of up to 800 000 ounces (25 tonnes) of PGMs in the form of converter matter as final product.

At optimum capacity, the project was expected to require an investment of up to US$4,2 billion. GDI plans to set up a refinery in line with the government's thrust on value addition.

Apart from the Russian deal, government also signed an agreement with Great Dyke Investments (Pvt) Limited.

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