Russia Makes $3 Billion Move on Zimbabwe Platinum

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Platinum producers in Zimbabwe have been complaining of excessive revenue/royalty contributions levied by the government, at a time when global commodity prices are soft.

Recently, Zimbabwe announced a cut to the gold royalty from 7% to 5%, in order to boost production to an annual level of 15 tonnes, which would allow re-admission to the London Bullion Exchange.

Currently, there is a levy of 10% on platinum miners, which include Impala Platinum (OTC:IMPUF) (Johannesburg, South Africa), Anglo Platinum (JSE:AMS) (Johannesburg) and Aquarius Platinum (JSE:AQP) (Johannesburg). To these companies--and now, it seems, to the government--over-taxation leads to diminished returns from the resulting lower production.

Last week, Russia and Zimbabwe signed a $3 billion deal for a joint venture (JV) platinum mine project in Zimbabwe , which is the world's third-largest producer of the precious metal. The newly created vehicle is Great Dyke Investments.

The vehicle will fund the development of the Darwendale mine, which is located northwest of the capital Harare. A smelter will be included. A metal refinery is also under discussion, and if this is finalized, it would bring the total for the Russo-Zim deal to $4 billion.

Russian banks have signed agreements to finance the project, and the government hopes it will boost platinum output to an annual 1 million ounces by 2019.

Currently, the country's mining sector is shrinking 1.9%. The government is moving to acquire unused mineral claims from investors. These could go to new investors from old political allies, Russia and China.

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