Zimbabwe opens door to $4.2 billion platinum mine investment from Cyprus-based Karo Resources

Zimbabwe has signed a $4.2 billion investment deal with Cyprus-based Karo Resources to develop a platinum mine producing 1.4 million ounces of Platinum Group Metals (PGM) annually by 2023.

The country’s Mines Minister, Winston Chitando, during the signing ceremony with Karo Resources representatives in the capital Harare on Thursday, revealed that “this is the largest investment structure in the country’s mining industry. The landscape of Zimbabwe’s mining industry will never be the same.”

The Zimbabwean government has identified the mining industry as a critical growth sector, as the country is rich in mineral resources including coal, chromium ore, asbestos, gold, nickel, copper, iron ore, vanadium, lithium, tin, platinum group metals and diamonds. Zimbabwe has about 50 minerals and mineral-based commodities.

 Zimbabwe has the second largest reserves of platinum in the continent and it is the second largest producer of PGM’s after South Africa. In terms of world production, the country is ranked fourth for platinum (2.3%) and fifth for palladium and other PGM’s (1.7%).

During the Zimbabwe Mining Investment Conference in February, United Kingdom-based mining consultancy firm, Mining Report noted that Zimbabwe’s 800 mines have the capacity to earn $18 billion per annum.

However, the country’s mining sector has only been turning out about $2 billion annually –a tenth of the sector’s full potential- since 2009. The mining sector that contributes about 50% of the country’s foreign exchange earnings and 4.5% of employment still needs $5 – 7 billion investment to grow. On a positive note, Mining Report said that “this translates to an incredible opportunity for investors, and the government is fully committed to creating an enabling environment for investors.”

In March 2018, the Zimbabwean government changed its empowerment law to limit majority ownership by state entities to only diamond and platinum mines and not the entire mining sector as in previous legislation.

Mining in Zimbabwe is hamstrung by legislation from its potential revenue generation and that has hindered the influx of investors into the Southern African country. Investors have also been skeptical about coming into the country due to the ongoing foreign currency challenges facing the country.