NO sector does a corporate faceplant quite like mining; tales of projects gone awry are legion.
One from Zimbabwe involves BHP’s 10-year odyssey of misspend at the Hartley Complex, which, true to the genre, tells of 10 years of upfront capital for a paltry return. By the time BHP brought the curtain down on Hartley in 1999, it had earned a mere $40m after $585m in expenditure.
Yet 26 years later, Implats is considering reopening it.
The plan is not as madcap as it might seem. After BHP’s misadventure, Implats helped repurpose Hartley’s processing facilities to treat ore from the nearby SMC/Ngezi orebody. This wasn’t a resuscitation of Hartley as much as a clever workaround. The outcome was Zimplats, in which Implats is an 87% shareholder. Delta Gold, BHP’s joint venture partner in Hartley, helped form the company.
In that sense, reopening Hartley represents a brownfields project, consistent with Implats CEO Nico Muller’s preference for extension over expansion. But Hartley is far from a certainty. Implats has considered its options previously before walking away. “Every time there was a better option, so we went in another direction,” says head of corporate affairs Johan Theron. “But it’s now on the radar screen.”
So, too, is a possible investment in Darwendale, another long-standing Zimbabwe PGM project. Initially unveiled in September 2014 by former president Robert Mugabe and Russian foreign minister Sergey Lavrov, the venture was conceived as a $450m underground mine. However, the scheme ran into difficulties in 2022, when the Russian partners withdrew and PGM prices plummeted.
Darwendale is now the property of Great Dyke Investments (GDI), controlled by Zimbabwe’s Kuvimba Mining House. GDI is planning a $50m open-pit mine, but it doesn’t have processing facilities. Theron says this is where Implats’s infrastructure is useful. The project is “close to us”, he says.
Implats is also discussing processing with Tharisa, the JSE-listed PGM and chrome miner that is nearing an investment decision about its $545m 226,000oz per year Karo Platinum project in Zimbabwe. Implats was Tharisa’s original buyer of concentrate for its South African mine, so there’s familiarity with the model that may also develop into an equity investment by Implats. Tharisa is finalising $300m in outstanding investment on Karo, part of which will be through a lender syndicate with the balance comprising a strategic equity stake.
While Implats is a potential investor, Phoevos Pouroulis, CEO of Tharisa, says government-backed private equity from North America and Europe is also in the mix for Karo. “The theme of security of supply is very relevant, and people who were not really on our list a year ago are now having serious conversations and showing serious intent regarding supply security,” he says.
Zimbabwe is a tough sell to investors, however. In addition to funding, Karo needs a fiscal deal with Zimbabwe, including tax breaks, that it can take to investors. Says Pouroulis: “We’re encouraged by the access and the amenability of the Zimbabwean government. There’s no issue in terms of support for the project.”
Zimbabwe has other challenges. There is a backlog in repatriation of dividends and profits. Valterra Platinum, which is invested in Zimbabwe’s PGM sector through its Unki mine, said in February it was owed $100m in unpaid export proceeds. Investors are also required to repatriate some of their proceeds in ZiG, Zimbabwe’s gold-backed currency.
Despite this, Zimbabwe has the potential to become a more meaningful source of PGM supply. Pouroulis says the entire resource in the Karo land package contains 96-million ounces, including an underground resource that could double the mine’s production “without any limitation” other than capital and time.
“We talk about multigenerational assets. This is one of those where, 100 years from today, we could still be operating,” says Pouroulis.
Tharisa is due to start exploration work on those resources this year.
This article first appeared in the Financial Mail. Miningmx is part of the Financial Mail Group along with Currency.
