Kuvimba Mining House (KMH), a State-owned enterprise, may cut the budget for its Darwendale platinum project owned by Great Dyke Investments due to depressed commodity prices on the international market.
KMH, which falls under Zimbabwe’s sovereign wealth fund, Mutapa, owns Great Dyke Investments, which is developing the multi-million platinum project a few kilometres west of the capital Harare.
Platinum is one of Zimbabwe’s largest exports, and along with gold (Zimbabwe’s biggest export), the two generate more than half the country’s export earnings.
KMH’s decision comes as global metal prices, except gold, have remained depressed, ultimately adversely affecting the production of minerals, including lithium and Platinum Group Metals (PGMs). According to the World Platinum Investment Council (WPIC), the platinum market recorded a deficit of 878 000 ounces last year.
Total supply fell by two percent while demand surged by 25 percent year-to-year, but this has failed to lift prices.
KMH acting group chief executive officer Engineer Trevor Barnard said despite the decrease in platinum price on the international market, the implementation of the project would proceed. GDI last year sought to raise US$50 million to start mining at the Darwendale project, valued at US$2,5 billion, after its Russian investment partner Vi Holdings pulled out of the deal.
The project initially was to be developed under a 50/50 joint venture between Zimbabwe’s Landela Mining Venture (Pvt) Limited and the Russians. The Russian investor pulled out of the project citing distractions associated with the geo-political conflict with Ukraine.
ALSO READ: Don’t Get Duped: How to Avoid Falling for High-End Counterfeit Scams
“There has not been much further development since then. The project is still in what we call the project phase.
“So, we are busy finding or searching for further funding to implement the project and trying to work on other scenarios on how to implement the project — because the current platinum price is quite depressed, it makes it difficult to find the funding that we require to implement the project,” he said.
“So, at this stage we are in the process of looking at different scenarios to try and reduce the funding requirements.”
In total, the GDI project that sits on a concession covering a total of an estimated 6 700 hectares, requires US$500 million.
Platinum is among the world’s scarcest metals and is used primarily in the production of automotive catalytic converters, in petroleum refineries and in the chemical and electrical industry.
With only three producing mines, Zimbabwe is the world’s third largest platinum producer accounting for 9 percent of the global output, behind global leader South Africa and Russia. The active mines are Zimplats, Mimosa and Unki. Several other projects are however at different stages of development.
In terms of strategies to raise the required funding, Eng Barnard said: “I think the most important thing for us is to be able to have a feasibility study that is required by the different funding companies or funding institutes.
“So we are working on implementing or working on finalising and improving our feasibility work that we’ve done to date.
“We are engaging a number of different funding organisations, both locally as well as internationally, to implement the project.”
Last year, KMH was reported to have injected US$100 million into the platinum project where part of the funding was partly used in exploration and feasibility studies, as well as establishing two box cuts which are single rectangular holes providing secure access and safe entrances to underground operations.
