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Concerns raised about Zim $4.2bn platinum deal

03 may 2018

The signing of a $4.2-billion deal last March between Zimbabwe and the shadowy Karo Resources to develop a platinum mine and refinery in the southern African country, received much media coverage.

Bloomberg had a headline that read, “Zimbabwe's New President Chalks Up $4.2 Billion PGM Deal” while Reuters noted, “Zimbabwe signs $4.2 billion mining investment deal with Karo Resources”.

The Reuters story was used by a number of news organisations across the world.

Readers were told that Karo was led by a wealthy Cyprus born mining magnate Loucas Pouroulis who was currently the executive chairman of South Africa-based mining company Tharisa, which had a large-scale chrome and platinum mine in the country.

Zimbabwe’s mines minister Winston Chitando claimed that “this is the largest investment structure in the country's mining industry in Zimbabwe”.

“The landscape of Zimbabwe's mining industry will never be the same," he said.

The $4.2-billion project was said to have been first mooted six years ago and would be expected to record an annual output of 1.4 million ounces within three years.

“"I am happy that this day has come,” said president Emmerson Mnangagwa.

“This has taken more than six years to reach this day. Had we embraced their intention to invest in this country in platinum the year they came and I took them to then President (Robert Mugabe), we should have been on the sixth year of the programme but because of bureaucracy and other unnamed vested interests which are corrupt, this could not happen."

However, concerns were raised about the deal.

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A tweet by a Zimbabwean writer, Joe Ruzvidzo sparked a debate on the authenticity of the deal as well as the status of Karo Resources as much was not known about the company, which didn’t even have an online presence.

The Zimbabwe Independent recently called for the platinum deal to be scrutinised although it was “positive”.

The weekly pointed out that the full beneficial owners of the deal were not declared beyond half disclosures.

“There was no explanation and detail of how the investment added up to $4,2 billion, an amount equivalent to the size of the country's budget,” the newspaper noted.

“Given that these are non-renewable resources, there is need for scrutiny and transparency to avoid robbing the country.”

A local economist John Robertson was quoted as saying that the failure by government to disclose finer details might signal that there was no concrete deal on the ground or something was being hidden from the public.

A simple Google search shows that Karo tried in 2013 to gain access to the 28 000 hectares of land containing platinum deposits that had been repossessed by the Zimbabwe government from Zimplats.

The Africa Report, citing local media, noted then that Pouroulis offered Harare $4 billion for the mining rights.

"We have noted with great interest your announcement of 12 February 2013 regarding the repossession of 27,948 hectares of land from Zimplats for allocation to new investors," reads part of the letter written by Pouroulis.

"Through this letter, I would like to re-affirm Karo Resources Ltd's desire, commitment and technical and financial ability to invest in Zimbabwe's platinum group metals (PGM) mining sector."

Dodgy

Although a few news articles about Karo were only on the 2013 move and the recent deal, it should be noted that Pouroulis had long shown interest in Zimbabwe’s PGM.

Mining Review reported in March 2009 that an unlisted Kameni Resources – which some people claimed was later named Karo – wanted to raise up to R1-billion ahead of a listing on the JSE, to fund their exploration and development programmes in South Africa and Zimbabwe.

The company confirmed at the time that it had planned to list on the JSE in March 2010 when it would look to raise around R5billion to complete the construction of the two PGM mines – one in South Africa and another in Zimbabwe.

Kameni, reported Mining Review then, was the brainchild of Pouroulis and he was the company’s non-executive chairperson.

The company claimed it was putting together a resource of 10 Moz of PGM for ‘its’ Bokai project, which was part of Anglo Platinum's Unki operation in Zimbabwe.

However, it later turned out that it had no stake in the project.

State-owned Herald newspaper reported on 06 April 2011 that Kameni was under investigation by the Johannesburg Stock Exchange and the South African police for raising millions of rands of seed capital from investors by falsely claiming ownership of part of the Bokai platinum reserves on the Great Dyke in Shurugwi.

“[On] March 5 2009, Kameni announced that “it had raised R300 million – its minimum capital raising requirement – in seed capital to fund its exploration programme in South Africa and Zimbabwe,” writes The Herald.

“Kameni advised further that its two major assets – the near-surface Kalkfontein (Tamboti) PGM project in South Africa and the surface PGM and chrome Bokai Project in Zimbabwe – lend themselves to rapid exploration, development and cash-generating mining.

“Despite their claim on the JSE, Kameni has not set foot on Bokai in Shurugwi. Some attempts at geological exploration work by Kameni’s Zimbabwean subsidiary, Mid-Ma, failed when within weeks of its raising millions of rands from investors, Mid-Ma geologists were arrested on Todal claims in Shurugwi, and their diamond drill rigs were impounded.”

Impala also castigated Kameni for being too “liberal” in its references to the company.

Given this alleged dodgy past, it is wise to scrutinize the deal inked with the mysterious Karo.

Zimbabwe’s ‘new’ government was desperate to attract foreign direct investment, but in doing so due diligence should be done on the potential investors.

Mugabe’s regime allegedly blocked Pouroulis when he came knocking at the door six years, ironically with the help of the current president.

Although president Mnangagwa said Pouroulis was blocked due to corruption, one cannot ignore the fact that they had picked up the funny things that he was allegedly associated with in 2008 and 2009.

If that was the case, then the current president’s relationship with Pouroulis should be subjected to much scrutiny to ensure Zimbabweans are not taken for a ride.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished