Russian investors stake claims for a slice of Zimbabwe’s economic pie

Russian investors are stepping up their presence in Zimbabwe, competing against China for a share of the country’s rich resources – from platinum to diamonds, commodities and a bank.

An announcement by a consortium of Russian Vi Holding, Rostec and Vnesheconombank that they plan a $3-billion investment to build Zimbabwe’s largest platinum mine is one example of how Russia continues 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 vehicle-makers, 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 Chemozov, a close ally of President Vladimir Putin. In April, the United States placed Chemozov under sanctions following Russia’s role in the Ukraine.

Billions for a new Zim mine
But being an enemy of the West makes for good friends in Zimbabwe – and in a letter to Putin, quoted by Russian media last week, Chemozov details plans to sink $3-billion into a 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.


Russian media reported that construction of the first phase of the mining and processing plant will begin in 2015, with an initial investment of $500-million for the $3-billion project.

The Darwendale claim 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 $50-million, 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 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 co-operation 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.

DTZ spokesperson Clara Ngwenya says the company is increasing production and has imported machinery from South Africa and Russia. A $20-million investment has been sunk into a new high-tech diamond plant in Chimanimani.

Strong political ties
On its website, Alrosa says Zimbabwe remains one of its key growth markets: “Zimbabwe is of interest for geological exploration and, possibly, for the ­establishment of joint diamond-mining enterprises.”

Russia and Zimbabwe enjoy strong political ties. In 2008, Russia vetoed a United Nations resolution against Zimbabwe, with then-president Dmitry Medvedev saying his government would work with other nations to unlock Zimbabwe’s political deadlock at the time.

This year, Zimbabwe voted against a UN resolution condemning the Moscow-backed referendum in Crimea. But the two countries’ political ties have yet to translate into substantial economic links.

Zimbabwe’s foreign minister Samuel Mumbengegwi, says: “We have enjoyed this political relationship, but on the economy we had not moved fast [enough].”

And a statement by the Russian embassy in Harare this week says: “Our political dialogue is excellent [and] that makes a solid basis for further development of our ­multifaceted ties, first of all economic co-operation.

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Jason Moyo
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