Zimbabwe Says Companies ‘Deliberately’ Delay Platinum Plant

Zimbabwe is in talks with private investors to build a $1 billion platinum refinery, after companies “deliberately delayed” construction, Mines Minister Walter Chidakwa said.

Chidakwa, who didn’t identify the investors, also repeated a Nov. 9 threat by President Robert Mugabe to halt exports of raw platinum. The measures would only be taken once a refinery is operational, he said. Zimbabwe has the world’s biggest known reserves of the metal after South Africa.

Impala Platinum Holdings Ltd. (IMP), Aquarius Platinum Ltd. (AQP) and Anglo American Plc (AAL)’s platinum unit are studying building a $3 billion platinum and base-metal refining complex in Zimbabwe, the Platinum Producers Committee, which represents the companies, said last month. The companies say Zimbabwe doesn’t produce the 100 megawatts of electricity the complex would need.

“We wanted to follow the value chain to ensure that Zimbabwe benefits as much as possible,” Chidakwa said in a phone interview from Johannesburg yesterday. “There has been a process of deliberately delaying things and nothing has happened to date. As soon as the refinery is set up we will make sure that no platinum is exported out of Zimbabwe without being processed first.”

Industry Investment

Zimbabwe’s platinum industry needs as much as $5.3 billion if it is to expand to more than 500,000 ounces of output and to construct precious- and base-metal refineries, according to the industry organization, which forecasts the nation’s production at 365,000 ounces this year.

Mugabe had given mining companies two years to start building a facility, according to the state-controlled Herald newspaper.

“We must see them now arranging to build a refinery,” the newspaper cited Mugabe as saying on Nov. 9. “Let us close our doors immediately and say no raw platinum will go to South Africa,” he was quoted as saying.

Impala spokesman Johan Theron and Charmane Russell, a spokeswoman for Aquarius at Russell & Associates, declined to comment. Anglo Platinum spokeswoman Mpumi Sithole didn’t immediately respond to an e-mailed request for comment.

The government is in discussions with three companies to build the refinery, which is likely to cost between $750 million and $1 billion, Chidakwa said. It is assessing the companies’ capacity to do the work, he said.

Ownership Laws

Mining companies operating in the country are compelled by law to cede or sell control of their assets to the government or black local citizens. The level of state participation in the refinery is negotiable, Chidakwa said.

“For us the primary objective is to have higher levels of value addition,” he said. “So the level of state participation can be negotiated.”

Mugabe, 89, won elections in July to extend his 33-year rule. Prior to the elections he made threats to seize control of mines and banks from foreign and white investors and give them to black citizens and the government.

Platinum for immediate delivery rose for the first time in three days, adding 0.2 percent to $1,394.63 an ounce by 4:13 p.m. in Johannesburg.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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