Harare - The Zimbabwean government on Thursday morning signed a $4.2bn mining investment deal with Cyprus-based Karo Resources.
The deal which was signed in the capital, Harare, will see Karo Resources develop a platinum mine that is expected to produce 1.4 million ounces of platinum group metals.
Zimbabwe is home to the second largest known platinum reserves after South Africa with three mining houses already established.
Zimplats, Mimosa and Unki, all foreign-owned, have been operating for years. A fourth company from Russia signed a $3bn platinum mining deal in 2014, but is yet to start production.
The Karo Resources deal comes at a time Zimbabwe has been changing its investment laws although those investing in platinum and diamonds are still expected to comply with the indigenisation laws that requires locals to own 51%.
Speaking at the signing ceremony, Zimbabwe Mines Minister Winston Chitando said Karo Resources was expected to be fully compliant with the empowerment law from the start by giving up majority ownership in the project.
Late last year, the Zimbabwean government slashed the rate of royalty for all platinum group mining companies to 2.5% from 10%, a move that is expected to attract more investors into the sector.
The decision to cut the platinum royalty was taken as part of measures to ensure equity and fairness in the taxation of PGM miners. The royalty is charged on gross annual revenue.
The Zimbabwean government also deferred the 15% levy on raw platinum exports cognisant of progress towards implementation of an agreed road map to construct value addition plants.
The levy has been deferred further for raw and semi-beneficiated platinum until January 1 2019.