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Russia Abandons Zimbabwe’s Great Dyke Platinum Project

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Darwendale Mine Great Dyke Platinum project

By Kestér Kenn Klomegâh

The lucrative $3 billion Great Dyke Platinum project contract signed in September 2014 between Russia and Zimbabwe has been abandoned by the former, several reports monitored this week confirmed.

Works are currently not going on in the platinum mine located about 50 km northwest of Harare, the Zimbabwean capital and the reasons for the abrupt termination of the bilateral contract have still not been made public.

However, Zimbabwe’s Centre for Natural Resource Governance pointed to a lack of capital for the project, so the site has been abandoned since early 2021.

It irreversibly brings to an end 16 years of Russian involvement with the project, taken away from South Africa’s Impala Platinum Holdings Limited in 2006 by the government of former Zimbabwean President Robert Mugabe and was on a silver platter given to Russian investors due to long diplomatic relations.

Foreign Minister Sergey Lavrov launched the $3 billion Russian project back in 2014, after years of negotiations, with the hope of raising its economic profile in Zimbabwe.

The project, where production is projected to peak at 800,000 ounces yearly, involves a consortium consisting of the Rostekhnologii State Corporation, Vneshekonombank and Vi Holding in a joint venture with some private Zimbabwe investors as well as the Zimbabwean government.

Most officials oftentimes speak about Russia and Zimbabwe having had good and time-tested relations from the Soviet days, supported Robert Mugabe and his ZANU-PF against the West.

Since the collapse of the Soviet era, Russia still maintains close political relations but its economic engagement has staggered. Russia has attempted to raise its economic profile, the latest considered an important milestone was in September 2014 when Russia declared interest in the development of platinum deposits in Darwendale.

Bloomberg News Agency report on June 3 was about the complicated ownership of Darwendale. It says output was initially expected to begin in 2021, but Russian links and a lack of capital aren’t the only things that have delayed the project.

Zimbabwean government says it controls Kuvimba. But its assets, including the stake in Great Dyke, are the same as those owned until at least late 2020 by Sotic International Ltd., a company linked to Kudakwashe Tagwirei, an adviser to Zimbabwean President Emmerson Mnangagwa who is sanctioned by the United States and the United Kingdom over corruption allegations.

The government hasn’t said how it acquired the assets or disclosed the identities of the private shareholders who own the 35% of Kuvimba not held by the state. Impala rebuffed an approach from Great Dyke because it was concerned about its ownership, people familiar with the situation said in February.

That opacity of its ownership has also complicated relations between Great Dyke’s shareholders. The project has also been stymied by “mismanagement and mistrust,” the Centre for Natural Resource Governances said in its report. “Mining operations have since stopped as the Russian investor has stopped pumping money into the project,” it said.

According to Bloomberg, the Darwendale has been tied to Russia since 2006, when former Zimbabwe president, Robert Mugabe, took the concession from a local unit of South Africa’s Impala Platinum Holdings Ltd. and handed it to Russian investors. The first venture to try and tap the deposit was named Ruschrome Mining – it included a state-owned mining company, the Zimbabwe Mining Development Corp., Russian defence conglomerate Rostec, Vnesheconombank and Vi Holding.

The venture later became Great Dyke, named after the geological feature where the deposit is found, and Vi Holding remained the sole investor from Russia. Vi Holding owner Vitaliy Machitskiy, who was born in Irkutsk in Siberia, is a childhood friend of Sergey Chemezov, chief executive of Rostec, according to Forbes. Maschitskiy was on the board of several Rostec’s units, while Chemezov himself is a close ally of President Vladimir Putin, with whom he once worked in Germany. Chemezov is sanctioned by the United States, European Union and the United Kingdom.

The Darwendale project was not tendered, according to available information from government website sources both in Russia and Zimbabwe. With its cordial relations, Russia was simply offered the lucrative mining concession without participating in any tender. After the project launch, Brigadier General Mike Nicholas Sango, Zimbabwe’s Ambassador to the Russian Federation, wrote me an email that “Russia’s biggest economic commitment to Zimbabwe to date was its agreement in September 2014 to invest US$3 billion in what is Zimbabwe’s largest platinum mine.”

“What will set this investment apart from those that have been in Zimbabwe for decades is that the project will see the installation of a refinery to add value, thereby creating more employment and secondary industries,” Brigadier General Sango explained.

“We are confident that this is just the start of a renewed Russian-Zimbabwean economic partnership that will blossom in coming years. Our two countries are discussing other mining deals in addition to energy, agriculture, manufacturing and industrial projects,” Ambassador Sango added.

Later, there was another landmark in the bilateral relationship. The groundwork was laid for expanding trade and investment when Zimbabwean President Robert Mugabe met President Vladimir Putin in Moscow in May 2015. Unexpectedly, political developments ushered in a new era with the emergence of a new leader in Zimbabwe. Russia reaffirmed its commitment to work with the new leadership.

In early March 2018, during his official visit to Harare, Sergey Lavrov was received by President Emmerson Mnangagwa. Lavrov had an in-depth meeting with Vice-President Constantino Chiwenga and later held talks with Minister of Foreign Affairs and International Trade Sibusiso Busi Moyo.

They acknowledged the fact that the two countries are interested in promoting partnership in geological exploration and production of minerals. They all listed significant spheres for possible cooperation and considered the platinum deposit as the driving force in the entire range of trade, economic and investment ties.

“The Republic of Zimbabwe Minister of Foreign Affairs and International Trade, Sibusiso Busi Moyo, and I have reviewed contacts in the context of relations between Russia and Zimbabwe. We have focused on a project for the integrated development of the Darwendale platinum group metals deposit, one of the largest in the world, where Russia and Zimbabwe operate a joint venture,” Lavrov said.

According to Lavrov, Russia and Zimbabwe maintain very strong mutual sympathies and friendly feelings, and this ensures a very trustful and effective political dialogue, including top-level dialogue. But now, it is necessary to elevate trade, economic and investment relations to a level that would meet political and trust-based relations.

Understandably, there has always been keen competition among foreign investors for the mining projects there. In March, the same month when Sergey Lavrov visited Harare, a Cypriot investor signed a $4.2 billion deal to develop a platinum mine and build a refinery in Zimbabwe, an investment that President Emmerson Mnangagwa explained that it showed his country was open for business.

Signing the agreement with Cyprus-based Karo Resources, Mines Minister Winston Chitando, said work would start in July, with the first output of platinum group metals expected in 2020, aiming to reach 1.4 million ounces annually within three years, that is 2023.

As far back as November 2018, President Emmerson Mnangagwa said his government would soon open up the platinum sector to all interested foreign investors. Zimbabwe has the world’s second-largest platinum reserves after South Africa. His government policy would guide the sector on such issues as exploration, ownership, mining, processing and selling.

Mnangagwa has been committed to opening up Zimbabwe’s economy to the rest of the world in order to attract the much-needed foreign direct investment to revive the ailing economy, and make maximum use of the opportunities for bolstering and implementing a number of large projects in the country. That Zimbabwe would undergo a “painful” reform process to achieve transformation and modernisation of the economy.

AFP reported that international funds are still blocked – Zimbabwe must clear its arrears before it could raise more loans needed to rebuild the country. With a total debt of $16.9 billion, it says it will clear almost $2 billion of arrears with the African Development Bank and the World Bank by October 2019.

Zimbabwe has various sectors besides mining. There is the possibility of greater participation of Russian economic operators in the development processes in Zimbabwe, and southern Africa. But Russians need a new approach to working with Africa, and first, have to move away from too much rhetoric to concrete economic engagement over the next years. Diplomatic relations between Zimbabwe and Russia already marked their 40th year.

Zimbabwe, a landlocked country in southern Africa, shares a 200-kilometre border on the south with South Africa, bounded on the southwest and west by Botswana, on the north by Zambia and on the northeast and east by Mozambique. Zimbabwe is a member of the Southern African Development Community (SADC).

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EU, IFC Launch €25m Fund to Rebuild Ukraine

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IFC Market Integrity

By Adedapo Adesanya

A new agreement between the International Finance Corporation (IFC) and Ukraine’s Energy Efficiency Fund will channel up to €25 million in EU funds to help homeowners’ associations restore war-damaged residential buildings, the organisations announced on Monday.

The effort will support Ukrainian families amid the ongoing war and boost the resilience of Ukraine’s residential sector. Since February 24, the conflict in Ukraine has substantially damaged or destroyed the homes of 2.4 million Ukrainians, according to the Ministry for Communities and Territories Development of Ukraine.

The Kyiv School of Economics estimates that the total number of the affected housing stock in Ukraine is up to 136,000 buildings or 40 per cent of the total number of residential buildings, including almost 16,000 multi-apartment buildings. As it stands, there is not enough public and private financing to rebuild the sector.

IFC will support the Energy Efficiency Fund’s Restoration Program by channelling the EU grants to homeowners’ associations across Ukraine, covering the costs of restoring multifamily buildings that did not suffer structural damage.

The programme will cover the replacement of windows, doors, roofs, and walls, among other elements, and IFC will also help the Fund with a pipeline of reconstruction projects as well as support beneficiaries with the application process.

A €5 million pilot phase is being rolled out in Kyiv, Zhytomyr, Sumy, and Chernihiv, larger cities in northern and central Ukraine that have come under increased attacks over the last two months.

Speaking on this, Mr Yehor Farenyuk, director of the state-owned Energy Efficiency Fund, said, “This programme launched by the Energy Efficiency Fund provides vital support to homeowners’ associations to help them restore buildings damaged by Russia’s military aggression.

“This is substantial support for many war-affected Ukrainians since the program will cover 100 per cent of the cost of all construction materials and work. We are very grateful to our partners — the EU and IFC — for their engagement and support, and we hope to continue our fruitful cooperation in this area.

“Rebuilding efforts in war-torn Ukraine cannot and should not be stalled,” said Ms Rana Karadsheh, IFC’s Regional Director for Europe. “We are grateful to the EU for their ongoing assistance, enabling us to provide vital support to Ukraine during these challenging times. We are committed to supporting Ukrainians and their efforts to restore residential and other economic sectors devastated by the war.

“The EU stands with Ukraine as it fights off Russia’s aggression and supports its people. We are happy to join forces with our trusted partners Ukraine’s Energy Efficiency Fund and IFC to help rebuild Ukrainian’s homes that were destroyed by Russia,” said Ms Katarína Mathernová, Deputy Director General of the Directorate General for Neighbourhood & Enlargement Negotiations and Head of the Support Group for Ukraine at the European Commission.”

Since October 2019, the original Ukraine Energy Efficiency Fund Program, led by IFC in partnership with the EU, has channelled grants worth nearly €15 million into energy-efficient renovations of 229 residential buildings in Ukraine, of which 109 are fully completed, with the remaining 120 projects continuing to implement the energy efficiency modernizations amid the war.

As part of IFC’s broader response to the war in Ukraine, in October, IFC launched another €25 million EU-supported programme to help municipalities to renovate municipally owned buildings to host internally displaced people.

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The Role of African Export-Import Bank in AU Agenda 2063

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African Export-Import Bank AU Agenda 2063

By Kestér Kenn Klomegâh

At the 12th Extraordinary Summit on Industrialization and Economic Diversification and the Extraordinary Session held in Niamey in late November, the African Export-Import Bank offered an instrumental report about the pace of economic diversification and industrialization across Africa. It was one among several review reports dealing with the present and the future of Africa.

In the first place, the African bank offers strong financial support, engages in external fundraising campaigns and collaborates with the African Union and the AU members. Beyond that, the bank gives advisory services relating to the development of various economic sectors, all these in attempts to improve the conditions, as espoused in the shared “Agenda 2063: the Africa We Want” in Africa.

With several initiatives and programmes, Afreximbank has pursued, with courage and determination, using the necessary high-level platforms within Africa and outside Africa to drum home the necessary funds for development. What is required here for African leaders to exhibit good governance, design and implement the best policies and speak with one voice to realize the set AU Agenda 2063.

While the bank has done a lot during the past few years, not many African leaders have achieved what was expected. That Afreximbank intervened strongly during the COVID-19 pandemic, disbursing over $8 billion to central and commercial banks to avert looming trade debt payment defaults and support the procurement of test kits, PPEs and other COVID-19 containment materials.

The Afreximbank supported the first ever pooled procurement by African Union members in an emergency when it provided a $2 billion financing towards the procurement of 220 million doses of Johnson and Johnson vaccines.

And as the Russia-Ukraine crisis rages on, the bank has also stepped up and already disbursed over $5 billion towards the procurement of food, fertilizer and grains. Beyond that, the bank is closely working with UNECA, the AU and the AfCFTA Secretariat to create a pooled procurement platform called the Africa Trade Exchange (ATEX), which is helping African countries to procure grains, edible oils and fertilizers at a much-reduced cost.

It continues to support the implementation of the African Continental Free Trade Agreement (AfCFTA). During the five years to 2021, Afreximbank disbursed over $20 billion in support of intra-African trade and investments and plans to double this to 40 billion US dollars during the five years of 2022 to 2026.

Afreximbank is helping African economies to manage the exodus of international banks by financing African-owned financial institutions to acquire those banks, helping to build a strong interconnected African financial system. It is re-creating banking systems so that they can serve Africa better. It has also onboarded about 500 of the continent’s 600 regulated commercial banks into Afreximbank Trade Finance Facility (AFTRAF) and provided them with Trade Credit Confirmation lines.

The goal is to grant an aggregate of $8 billion in Trade Confirmation lines to these African banks and ensure that every country on our Continent has at least one bank that has a dedicated credit line to support intra-African trade. Afreximbank sits today at the centre of the most extensive messaging network, with connections to almost 500 banks. It has built a web that will form the architecture for an integrated African banking network.

These mentioned above are the bank’s efforts to support Africa’s economic development prospects defined by the extent of control the continent wields over its financial system, that it is access to and control of capital that defines the future of the continent.

As partners, Afreximbank, the African Union Commission and the AfCFTA Secretariat have launched the commercial operations of the Pan-African Payment and Settlement System (PAPSS). It has now become possible to conduct intra-African trade payments in African national currencies. The bank is proud to be backing settlements under this system with a facility, thanks to the leadership of the African Union and the Commission for their strong support towards this transformative initiative.

Afreximbank is working with the AfCFTA Secretariat and Council of Ministers for Trade to establish the AfCFTA Adjustment Fund. The Fund is expected to help countries to adjust in an orderly manner to AfCFTA tariff removals and prepare them to participate in the new trading regime. The Bank was earlier this year appointed the Fund Manager of the $10 billion Fund, which it is supporting with a $1 billion facility and a $10 million grant directed at the Base (Compensation) Fund.

With industrialization, the bank is working with various African governments to develop and expand Industrial Parks (IPs) and Special Economic Zones (SEZs) to deal with infrastructural constraints to industrialization. These parks are ongoing across ten African countries, including two parks in Malawi and one in Cote d’Ivoire under development. It has also commenced discussions for the creation of industrial parks in DRC, Zambia, Rwanda, Kenya and Botswana.

In the first-ever Africa-Caribbean Summit in 2021, Afreximbank has taken steps to accelerate the integration of the two regions. In early September, the first-ever Africa-Caribbean Trade and Investment Forum which attracted over 1,000 participants from Africa and the Caribbean.

Since then, about 9 of 14 CARICOM countries have signed a Partnership Agreement, a treaty instrument akin to the Afreximbank Establishment Agreement, thereby opening up the region for bank interventions. This partnership creates an opportunity for Afreximbank to facilitate and promote trade and investment flows between the two regions and attract African investments into the Caribbean and Caribbean investments into Africa.

In that regard, it has conducted successful trade and investment missions to the Caribbean with African corporates and banks to explore opportunities in that market. Plans are advanced towards opening an Afreximbank office in the Caribbean so that it can support Africa-Caribbean trade and investments better.

With the mandate to forge greater partnerships, Afreximbank is seriously working jointly to push ahead with the pan-African trade and industrialization agenda. These dynamic collective efforts are directed towards the realization of the shared developmental goals with Agenda 2063. Afreximbank remains alive to that responsibility with African Union.

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Rosatom Plans Small Nuclear Power Plants For Africa

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Rosatom power solar power

By Kestér Kenn Klomegâh 

At least 600 million people in Africa without access to electricity and inadequate funding for power generation, Russia’s Rosatom state nuclear energy corporation now proposes to provide, over the next several years, mini nuclear plants for generating reliable and affordable power in a number of African countries.

According to the latest information obtained at the Atomexpo-2022, Rosatom is discussing, as part of the energy mix, the use of small nuclear power plants (SNPP) and floating nuclear plants for African countries. The African Energy Chamber reports say Africa expects to achieve universal access to affordable electricity by 2030. Many countries are finding ways to expand access to electricity.

President of Rusatom Overseas (part of Rosatom state corporation) Yevgeny Pakermanov said at the Atomexpo-2022 forum that his company is holding a series of dialogues with African colleagues. “We continue to work with Rwanda, Nigeria and other countries of the region. A floating NPP may be very promising in this region, and we are also discussing the use of floating nuclear heat and power plants for the African region,” he said.

According to figures provided by the International Atomic Energy Agency (IAEA), there are around 50 projects and concepts for small nuclear power plants, or small modular reactors (SMRs), as the IAEA defines them, throughout the world. The majority of them are at various stages of development.

Leaders of African governments are keenly interested in adopting nuclear energy to end chronic power deficit, but some may be forced either to keep on postponing or completely abandon the project primarily due to lack of finance or credit guarantees.

Usually, Russia does not grant concessionary loans and has not publicly allocated a budget for Africa. But in this exceptional case, Russia and Egypt signed an agreement, and the total cost of construction is fixed at $30 billion. Russia provides Egypt with a loan of $25 billion, which will cover 85% of the work. The Egyptian side will cover the remaining expenses by attracting private investors. Under the agreement, Egypt is to start payments on the loan, which was provided at 3% per annum, in October 2029.

Foreign Minister Sergey Lavrov has reiterated that Rosatom is considering a number of projects that are of interest to Africans, for instance, the creation of a nuclear research and technology centre in Zambia. Nigeria has a similar project. There are good prospects for cooperation with Ghana, Tanzania and Ethiopia.

Foreign and local Russian media reported that Russia wanted to turn nuclear energy into a major export industry. It has signed several agreements with as many as 14 African countries with no nuclear tradition, including Rwanda and Zambia, and is set to build a large nuclear plant in Egypt.

Nuclear is too high an economic risk for countries that cannot afford to make big mistakes. However, they must be guided by Chernobyl disaster in Ukraine and Fukushima in Japan; millions of people are still suffering from radiation and radiation-related diseases today.

Currently, many African countries are facing an energy crisis for both domestic and industrial use. Energy poverty affects millions of their citizens. Over 600 million in Sub-Saharan Africa, out of more than one billion people, still do not have electricity. The industrial sector needs power for its operations and production for the newly established single continental market.

The international forum Atomexpo-2022, held November 21-22, is one of the most important events in the global nuclear sector. Leading experts and specialists from over 50 countries participated in the forum under the theme Nuclear Spring: Creating a Sustainable Future.

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