Zimbabwe: Bear versus Dragon

Russia expands presence
The Russians have also quietly established a presence in the country. A recent announcement by a consortium of made up of Russian Vi Holding, Rostec and Vnesheconombank that it will invest $3bn to build Zimbabwe’s largest platinum mine is one example of how Russia is continuing to broaden its interests in Zimbabwe.

Rostec is a large, state-owned conglomerate that has invested in more than 600 Russian firms. Among its interests are auto manufacturing firms, which may have convinced the company to seek new investments in platinum group metals, which are used in the manufacture of catalytic converters to reduce vehicle exhaust emissions.

Rostec’s head is Sergei Chemezov, a close ally of President Vladimir Putin. In April, the US placed Chemezov under sanctions following Russia’s role in the Ukraine.

But being an enemy of the West makes for good friends in Zimbabwe – and in a letter to Putin, quoted by Russian media recently, Chemezov details plans for the new mine in Zimbabwe.

The company hopes to have completed exploration by the end of this year and then to begin building the mine at Darwendale, some 60km north west of the capital, Harare. Russian media reported that construction of the first phase of the mining and processing plant will begin in 2015, with an initial investment of $500m for the $3bn project.

The Darwendale mine is said to have reserves of 19 tonnes of platinum and 755 tonnes of other metals such as palladium, rhodium, gold, nickel and copper. After the mining and processing complex is launched, capacity will reach 600,000 ounces of platinum annually. That level of production would be a huge boost for the country, whose mines produced a record 430,000 ounces last year.

Mines Minister Walter Chidhakwa says a team is being sent to Russia to discuss the Darwendale proposal. If it is successful, the platinum mine will be a big leap for Russian investors, who have been nibbling at the edges of Zimbabwe’s resources for years, but have begun to show more interest in recent months.

Horizon Capital, a consortium of Russian investors, has recently completed the takeover of Tetrad, a Zimbabwean financial institution.
The deal is said to be worth $50m, according to various market sources. Sergey Pokusaev, said to be the head of the consortium, appears interested in using Tetrad as an avenue into making further investments in Zimbabwe.

Alexander Chepik, the head of Ruschrome, says Zimbabwe’s rich mineral resources are a major attraction for Russian investors.

“The whole of Mendeleev’s table is there,” he told Russian media, referring to the periodic table of elements invented by the Russian chemist Dmitri Mendeleev.

Russia already has interests in Zimbabwean natural resources through DTZ-Ozgeo, a joint venture between Econendra of Russia and the Development Trust of Zimbabwe.

The company is one of several licensed to mine diamonds in the east of the country. DTZ-Ozgeo has recently signed a technical cooperation agreement with Russia’s state-owned Alrosa, the world’s largest diamond miner by volume, accounting for over a third of global rough diamond production.

As they say, when one door closes, another opens.