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Zimbabwe Sees $1.6 Billion Platinum Pact With Russia

Aug. 5 (Bloomberg) -- A group of Russian partners and the Zimbabwe government will next month sign an agreement to develop a mine on a platinum deposit requiring total investment of about $1.6 billion, the African country’s mines minister said.

OOO VI Holding and state corporations Rostec and Vnesheconombank plan to confirm their participation in the Darwendale project at an event in Harare, the capital, Walter Chidakwa said in an interview.

“The project will naturally involve mining, putting up concentrators to concentrate the ore and they will then put up a smelter, a PGM smelter,” Chidakwa said yesterday.

Darwendale will be developed in phases, the first of which will be the construction of a mine, without a smelter, at a cost of $400 million to $500 million, the minister said. Mining would start next year, initially as an open-pit operation for two-to-three years. Chidakwa and Finance Minister Patrick Chinamasa were in Russia last week for a visit that ended Aug. 2.

“The visit was mainly to go and see members of the consortium, including the bank, and we had very useful discussions, very successful discussions,” Chidakwa said.

Russian Natural Resources Minister Denis Khramov last week met Chidakwa and Chinamasa to discuss possible cooperation in Zimbabwean mining projects, the Moscow-based ministry said in a statement.

Sanctions List

Rostec Chief Executive Officer Sergey Chemezov is among a group of individuals sanctioned by the U.S. in April over Russia’s involvement in the conflict in Ukraine. VEB was included on a European sanctions list last week that restricts it from selling bonds or shares in Europe. The U.S. sanctioned the bank on July 16, barring it from any long-term borrowing on the American market.

VI Holding last year bought 50 percent of Ruschrome Mining, which holds the license for Darwendale, Kommersant newspaper reported in June. VI Holding is owned by entrepreneur Vitaliy Machitski, chairman of aluminum producer Vimetco NV.

The press offices of Rostec and VEB declined to comment, as did a representative of VI Holding.

Zimbabwe has yet to award the rights to build a plant to refine metals at Darwendale, Chidakwa said.

“The refinery is something we are in the process of determining, because there is a mistake in thinking we have awarded the Russians the rights,” he said.

‘Very Soon’

“The job to do the base metal refinery and precious metal refinery -- that part is still to be decided and we are in the process of finalizing that aspect, but the mining aspect, including a smelter, we have finalized and very soon in September we will be signing the agreement,” said Chidakwa.

The Russian partners may invest as much as $3 billion in Darwendale, with possible production capacity of 600,000 ounces of platinum a year, Kommersant newspaper reported in June, citing people familiar with the situation that it didn’t identify.

The price of platinum for immediate delivery dropped 0.4 percent to $1,457.88 an ounce by 1:25 p.m. in London. The metal has advanced 6.3 percent this year.

To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net John Viljoen, Indranil Ghosh

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