Zimbabwe’s biggest platinum project, which has been struggling to get off the ground for the past two years, has a new challenge – a major stake held by a Russian tycoon is scaring off potential financiers for the $3 billion (R1.8 trillion) mine, people with knowledge of the matter have said.
Initial development work on the Darwendale Platinum Project began in early 2020, but operations were soon halted because of a lack of capital. The site has been abandoned since early last year, according to a report by Zimbabwe’s Centre for Natural Resource Governance.
Vitaliy Machitskiy’s Vi Holding, which has a 50% stake, is reluctant to continue investing after years of delays.
But Kuvimba Mining, which owns 50% of the project and which government says it controls, has been unable to attract fresh investment because European platinum buyers do not want to enter into purchase agreements with an entity with Russian shareholders, the people said.
The fear of running up against sanctions stemming from Russia’s invasion of Ukraine means it is also harder to borrow money to develop the project, they said.
The Darwendale project is “ongoing” and the mine plan is being remodelled, said Simba Chinyemba, Kuvimba’s CEO, declining to provide more details. Kuvimba and Vi Holding each hold half of Great Dyke Investments, which owns the Darwendale deposit.
DEEP TIES TO RUSSIA
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 and handed it to the Russian investors. The first venture to try to tap the deposit was named Ruschrome Mining -- it included a state-owned mining company, the Zimbabwe Mining Development Corporation, Russian defence conglomerate Rostec, Vnesheconombank and Vi Holding.
The venture later became Great Dyke, named after the geological feature where the deposit is found, and Vi Holding became the sole investor from Russia.
Machitskiy, who was born in Irkutsk in Siberia, is a childhood friend of Sergey Chemezov, CEO of Rostec. Machitskiy was on the board of several of Rostec’s units, while Chemezov himself is a close ally of Russian President Vladimir Putin, with whom he once worked in Germany. Chemezov is sanctioned by the US, the EU and the UK.
Calls to Winston Chitando, Zimbabwe’s mines minister, went unanswered. Onesimo Moyo, the country’s secretary for mines, was said to be in a meeting when he was called.
Igor Higer, the chairperson of Great Dyke and a representative of the Russian investors, did not respond to emailed questions, phone calls or text messages. Vi Holding did not immediately respond to a request for comment.
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 last year, but the Russian links and a lack of capital are not the only things that have delayed the project.
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, a company linked to Kudakwashe Tagwirei, an adviser to President Emmerson Mnangagwa. The Zimbabwean leader is sanctioned by the US and UK governments due to allegations of corruption.
Government has not 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.
Impala rebuffed an approach from Great Dyke because it was concerned about its ownership, people familiar with the situation said in February.
That opacity of its ownership has also complicated the relations between Great Dyke’s shareholders. – Bloomberg