PLANS by Karo Resources (Karo) to set up a US$4,2 billion platinum mining venture and a processing plant in Darwendale after it was controversially allocated claims previously held by Zimplats are crumbling like a deck of cards after the company missed its ambitious target to construct the first of four portals by year end.
Tinashe Kairiza/Melody Chikono
After being allocated the vast platinum fields, which President Emmerson Mnangagwa commissioned amid pomp and fanfare in 2018, the company said it would need just two years to become fully operational and declared the first four portals would be in place by December 2020.
It has, however, failed to open any of the promised portals, leaving the whole deal in limbo.
The latest revelations validate investigative reports by the Zimbabwe Independent dating back to 2018, which showed that the so-called US$4,2 billion project had not found any proper financiers when Mnangagwa gave the entity the greenlight to exploit Zimbabwe’s vast platinum fields.
At the time, this newspaper revealed that even the US$4,2 billion supposed value of the project publicised by government was astronomically overstated, a reality which came to light when Karo Resources disclosed that the project was not bankable, as reported on November 2, 2018.
Ongoing investigations on the opaque project, whose terms have remained a closely guarded secret between Karo Resources and government, show that the company, owned by controversial businessman Lucas Pourolis, has missed key targets of their plans, including setting up the first mining portal by end of this year.
Karo, which is incorporated in the secretive tax haven of Cyprus, announced in November 2019 that it had completed an exploration exercise but did not disclose the quantum of its reserves under plans to produce 1,4 million ounces of platinum by 2023.
Karo Resources country manager Josphat Zimba claimed that the exploration was a resounding success, but could not, however, disclose the capital injected to undertake the initiative.
“It (the exploration was successful,” he said without shedding light on the actual results of the exploration before requesting for questions in writing, which he had not responded to by the time of going to print. His mobile phone was by that time no longer reachable.
But Ministry of Mines and Mining Development sources close to the project told the Independent that government, after realising that it was attempting to build castles in the air, was considering ditching the initiative, which former president Robert Mugabe had ignored since 2005 when Karo first expressed interest to mine platinum.
“The project was doomed right from the moment Mnangagwa parcelled out the vast claims to Karo. It was clear right from the start that Karo did not have the financial wherewithal to foot the cost of the project,” the source said.
“Historically, Mugabe, since 2005, refused to be sold on the project when Karo first expressed the interest to extract platinum in Zimbabwe.”
Mines minister Winston Chitando also demanded written questions, but did not respond to them.
Some of the milestones targeted by Karo included producing 3,6 million tonnes of ore and
350 000 ounces of platinum group of metals in 2020.
Over the next three years, the entity ambitiously projected it would scale up platinum ore production to 14,4 million tonnes and 1,4 million ounces of platinum group of metals in 2023.
The centrepiece of those lofty plans would be the setting up of a base metal refinery and precious metal refinery with capacity to employ 15 000 people directly when the plant starts operating at optimum levels. An additional 75 000 jobs were expected to be spun by industries feeding off from the US$4,2 billion plant.
Karo’s vast claims along the resource-rich Great Dyke lie on a land area stretching close to
24 000 ha.
When the deal was signed in 2018, Karo Resources, at that time, had only managed to mobilise US$8 million from Tharisa Plc — a company in which the Pourolis family holds a 42% stake.
In July of that year, Tharisa Plc senior partner Bobby Morse told the Independent on the sidelines of the platinum project ground-breaking ceremony that the Johannesburg Stock Exchange and London Stock Exchange-listed firm was still going through the preliminary stages of the deal and could not yet precisely determine the specific amount of financial resources required to implement the project, triggering questions as to how the US$4,2 billion figure came about.
“That US$4,2 billion is something that the government mentioned, not Tharisa, not Karo; it is a government number, we do not have a number, but it is going to be a few billion, we are at a very early stage,” Morse told the Independent then.
“We have started the drilling, we have drilled one hole, there are many more holes to come, so thereafter once we have actually proven that we have the resource and in the meantime there is also other work streams going on, on how best to build this operation.”
Karo Holdings is seeking to mine platinum through Karo Platinum, on land acquired from Zimplats, as well as refining platinum through a company called Karo Refining.
Karo Platinum is an indirect 50%-held subsidiary of Karo Holdings, with the remaining 50% to be held by an investment company wholly-owned by the Zimbabwe government. It will also exploit coal through Karo Coal and generate power through a company called Karo Power.