Zimbabwe’s biggest platinum project, 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 mine, people with knowledge of the matter said.
Initial development work on the Darwendale deposit began in early 2020, but operations at the project were soon halted because of a lack of capital and 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, the people said, asking not to be identified as the talks aren’t public.
But Kuvimba Mining House Ltd., which owns 50% of the project and which the government says it controls, has been unable to attract fresh investment because European platinum buyers don’t want to enter into purchase agreements with an entity with Russian shareholders, the people said. The fear of running up against sanctions stemming from Moscow’s invasion of Ukraine means it’s also harder to borrow money to develop the project, they said.
The Darwendale project is “ongoing” and the mine plan is being remodeled, said Simba Chinyemba, Kuvimba’s chief executive officer, declining to provide more details. Kuvimba and VI Holding each hold half of Great Dyke Investments Ltd., which owns the Darwendale deposit. “What I can tell you for a fact is that the project is going ahead,” he said.
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 Holdings Ltd. and handed it to Russian investors. The first venture to try and tap the deposit was named Ruschrome Mining — it included a state-owned mining company, the Zimbabwe Mining Development Corp., Russian defense 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 remained the sole investor from Russia.
Machitskiy, who was born in Irkutsk in Siberia, is a childhood friend of Sergey Chemezov, chief executive of Rostec, according to Forbes. Maschitskiy was on the board of several Rostec’s units, while Chemezov himself is close ally of President Vladimir Putin, with whom he once worked in Germany. Chemezov is sanctioned by the US, EU and UK.
Calls to Winston Chitando, Zimbabwe’s mines minister, weren’t answered. Onesimo Moyo, the country’s secretary for mines, was said to be in a meeting when his phone was called.
Igor Higer, the chairman of Great Dyke and a representative of the Russian investors, didn’t respond to emailed questions, phone calls or text messages. Vi Holding didn’t 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 in 2021, but Russian links and a lack of capital aren’t 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 Ltd., a company linked to Kudakwashe Tagwirei, an adviser to Zimbabwean President Emmerson Mnangagwa who is sanctioned by the US and UK governments over corruption allegations.
The government hasn’t 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 relations between Great Dyke’s shareholders.
The project has also been stymied by “mismanagement and mistrust,” the Centre for Natural Resource Governances said in its report. “Mining operations have since stopped as the Russian investor has stopped pumping money into the project,” it said.
© 2022 Bloomberg