Business Day

Karo’s platinum deal on shaky ground

- Kevin Samaita

Karo Resources, a unit of JSE-listed Tharisa Resources, appears to be flounderin­g in its purported $4.2bn platinum venture in Zimbabwe, as the project is failing to take off, missing several promises made.

Zimbabwe signed the Karo Resources deal in 2018, with Tharisa Resources saying it expected the first output of platinum group metals (PGM) by 2020.

At the time, Zimbabwe mines minister Winston Chitando described the deal as “the largest investment structure in the country’s mining industry” as the project was expected to produce 1.4-million ounces of platinum annually.

In addition to the mining of platinum, Karo Resources also promised to set up infrastruc­ture to mine chrome and build a 600MW power plant and a refinery to process platinum.

Zimbabwean President Emmerson Mnangagwa was invited to the groundbrea­king ceremony for the project.

All these plans have yet to materialis­e amid doubts that the project will ever take off.

In a statement to the media last week, Tharisa head of investor relations and communicat­ions Ilja Graulich said the project had been hampered by stumbling blocks. He attributed the bulk of the project’s challenges to Covid-19.

COVID-19 DID CAUSE A GOOD NINE-TO-12MONTH DELAY, AND THE COMPLEXITI­ES ASSOCIATED WITH RUNNING ON-THEGROUND STUDIES

Ilja Graulich Tharisa head of investor relations

“Covid-19 did cause a good nine-to-12-month delay, and the complexiti­es associated with running on-the-ground studies during wave one and wave two of Covid-19. In [financial] 2020, we invested, given Covid-19 complexiti­es, some $8m on studies. Our financials for FY2021 will be out in December 2021, but we have spent significan­tly more on the project and have advanced a number of studies in the timeline, including geology, mining, processing, EIA [environmen­tal impact assessment] and infrastruc­ture,” Graulich said.

Karo Resources had initially targeted producing 3.6-million tonnes of ore and 350,000oz of PGMs by 2020.

Previous investigat­ions have revealed that the projection­s could have been overestima­ted.

An official from the ministry of mines, who asked not to be named, told Business Day there are a number of factors that raise eyebrows about the deal.

“There are a number of things that are not in order. The targets and timelines that were set by the company appear not to be achievable. It could be that they simply sold a dummy to Zimbabwe’s government which was keen to take in investors, soon after Mnangagwa won (disputed) elections in 2018.

“The project promised 75,000 jobs and to start exports by 2020. All this sounded unrealisti­c even if we consider that Covid-19 caused setbacks,” the official said.

The project had previous controvers­ies as former Zimbabwe president Robert Mugabe initially gave the project to Tharisa chair Loucas Pouroulis in 2005, before reversing the decision.

But after Mugabe’s rule was ended in November 2017 by a coup that propelled Mnangagwa to the helm, Pouroulis was given the nod to set up platinum operations in 2018.

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