Zimbabwe's New President Chalks Up $4.2 Billion PGM Deal

(Bloomberg) -- Karo Resources, a company linked to mining entrepreneur Loucas Pouroulis, will spend $4.2 billion on a Zimbabwean platinum project in the first big investment since President Robert Mugabe’s ousting in November.

The deal is the largest to date in Zimbabwe’s mining industry, Mines Minister Winston Chitando said. President Emmerson Mnangagwa has declared the “country open for business” as he seeks to revive the economy and attract investment.

Zimbabwe's New President Chalks Up $4.2 Billion PGM Deal

“It is not business as usual anymore,” the president told reporters on Thursday. “Things have to change.”

Karo’s platinum project will start up in 2020 and produce 1.4 million ounces a year of platinum-group metals at full output, potentially making it the country’s top producer by 2023, Chitando said. Zimbabwe has the second-biggest reserves of the metals after South Africa.

The project will also include a 600 megawatt power plant and coal-mining operations to feed it.

Pouroulis has a long history in southern African mining. He set up South African platinum-mining ventures Lefkochrysos, which means ‘white gold’ in Greek, and Eland Platinum. Eland was sold to Xstrata Plc in 2007 for the equivalent of $1.1 billion. His son Phoevos met Mnangagwa in the president’s office in January.

Security of tenure and the outlook for platinum demand will be key to the success of Karo’s project, said Ross Harvey, a mining analyst at the South African Institute of International Affairs,

Platinum prices have fallen by half since a peak in 2011, amid concerns about demand for the metal used to curb pollution from diesel cars. Zimbabwe has a law requiring that platinum and diamond mining companies be at least 51 percent locally owned, although Chitando said last month the government will consider applications for waivers.

“Zimbabwe’s geology is unrivaled,” Harvey said by phone from Cape Town. “While six months ago you would have struggled to talk that kind of capital, investors have a short political memory.”

©2018 Bloomberg L.P.