Rio Tinto ready to build Simandou after almost 30 years of setbacks
Simandou has faced delays due to legal disputes, political changes, and the challenges of building a 600 km rail and port infrastructure.
News reports on Saturday say Rio Tinto’s Zimbabwe subsidiary Murowa Diamonds has ceded 51% of its equity to comply with a new law that requires Zimbabweans to own the majority of foreign companies.
Rio Tinto says on its website it has completed a feasibility study and received environmental go-ahead to expand Murowa production 8-fold at a cost of $200 million. Saturday’s report cast serious doubts on whether the investment, which requires foreign capital, would now be made. It appeared in recent weeks as if Zimbabwe was soft-pedalling the indigenization laws, but Rio Tinto’s capitulation has now put pressure on Impala Platinum, struggling to hold onto its $20 billion worth of reserves in the country.
The Murowa diamond mine was commissioned in 2004 with Rio Tinto owning 78% and ZSE-listed Riozim the rest. The mine is located in the Midlands region, not in the rich Chiadzwa/Marange alluvial fields in the east of country currently under an international export ban, and is a small-scale operation that produces about 250,000 carats per annum and employs 180 people. Rio Tinto says on its website that it completed a detailed feasibility study and gained environmental approval in 2007 to expand production from 250,000 tonnes to two million tonnes per annum. “Capital cost for this expansion is anticipated to be in excess of US$200 million, requiring significant overseas financing for this project to proceed,” says the Murowa diamond website.
New Zimbabwe quotes Indigenization Minister Saviour Kasukuwere as telling the state-owned Herald newspaper on Saturday: “Murowa Diamonds wrote to us yesterday saying they have given up 51% shares and these would be given to our people,” Kasukuwere belongs to the faction of President Robert Mugabe pushing for the indigenisation law which has raised tensions within the shaky unity government with Prime Minister Morgan Tsvangirai ahead of elections.
MINING.com reported in September Zimbabwe’s mines minister told delegates at a conference in the capital Harare that the government has received 400 applications from companies interested in mining diamonds. That may now prove to be an over-optimistic claim given the reluctance of foreign companies to cede control over operations or new investments.
Impala Platinum, the world’s number two producer, is still locked in tough negotiations and said in September it is holding back investments of some $10 billion until ownership demands are dropped. While most of the firm, responsible for some 30% of world production, are in South Africa, 11.3Moz, or almost a third of its total platinum reserves, are in Zimbabwe. That’s worth about $20 billion at the current platinum price.
Zimbabwe has the second largest deposits of platinum after South Africa and according to the British Geological Survey (BGS) reported on by MINING.com last month platinum is second on the list of the 52 elements, minerals and metals most at risk of supply disruption because global production is concentrated in a few countries.
Image of Zimbabwe postage stamp showing morganite circa 1980 by IgorGolovniov / Shutterstock.com
4 Comments
The Mafia Man
No wonder that all the “SMART” wemon prefer Diamonds!!
Mrkhrdr
RT is ceding 51% of its shares to whom, exactly? Is every Zimbabwean citizen going to receive an envelope in the mail containing paper certificates? No, I didnt really think so. What institution, then, will accept the controlling interest in these mines? What will they do with this interest? Issue dividends to Zimbabweans, ala Alaska with its oil fees? What will this institution do with it’s controlling interest? The lack of detail provided in news reports concerning “indigenization” in Zimbabwe, given its record concerning land indigenization, is rather suspicious to me.
KidCrystal
Corporate greed funding human exploitation and corporate governance masking “corruption”.
Farai Karonga
A necessary move by any responsible government. Never mind the slander and myopic rhetoric from the fringes by people that have never given a hoot about indigenous participation in the economy. Resource nationalism is as legitimate a policy as any.