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Russia Abandons Zimbabwe’s Great Dyke Platinum Project



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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United Kingdom to Cut Taxes on Products Imported from Africa



UK cut taxes

By Kestér Kenn Klomegâh

Besides pursuing concrete investment projects and running a joint business with local partners, the United Kingdom now plans to considerably cut taxes from around 99 per cent of goods imported from Africa.

At least, after its historic UK-Africa Investment Summit held in January 2020, the UK has increased its support for business on the continent, a step that aims at strengthening aspects of the planned economic cooperation with Africa.

Monitoring developments and random research after the summit, we have noticed different priorities – all of which are supporting and strengthening economic partnerships in a number of countries on the continent. The significance of these is to help unlock opportunity, spread prosperity and thus transform lives in Africa.

Judging from our monitoring and research indicates that while the visible practical steps aimed at building a more practical partnership, it is simultaneously helping to lay the foundation for sustainable future relations. It has displayed not only heightened interest but also delivered on its plans to engage Africa.

The Department for International Trade said in a media release that it would cut import taxes on hundreds more products from some of the world’s developing countries to boost trade links. It explained further that the measure was part of a wider push by the UK to use trade to “drive prosperity and help eradicate poverty” as well as reduce dependency on aid. The scheme covers 65 developing countries and will affect around 99% of goods imported from Africa.

Goods such as clothes, shoes and foods not widely produced in the UK would benefit from lower or zero tariffs. But goods and services from Africa make up just a tiny share of the UK’s imports, accounting for 2.5% of the total goods imported into Britain.

South Africa and Nigeria, the continent’s two largest economies, make up 60% of the entire UK-Africa trade relationship. Only eight nations from sub-Saharan Africa mostly former colonies count the UK in their top 10 export destinations, including Rwanda, Mauritius, Seychelles, Sierra Leone, Ghana, Mozambique, Kenya and South Africa. Britain has been long criticized for undervaluing trade with Africa. The amount of products Britain sends to Africa isn’t just small, it’s also shrinking.

As the UK Minister for Africa, MP Vicky Ford, explained “the overarching aim of all this work is to try to help, build the resilience of countries and to help them have much more durable prosperity. For far too long, African countries have endured the fallout from global forces outside their control and the compelling tasks are to build more sustainable economies in African countries.”

Over the past 12 months, we have calculated or tallied, at least, 14 African countries visited by the UK Minister for Africa, MP Vicky Ford. In most of these African countries, the UK-Africa’s partnership agenda is, in practical terms, working. It, at the same time, shows a huge difference between rhetoric and what it takes to deliver all that is listed on agenda with Africa.

British investors are strategically leveraging unto trade platforms, working to support the creation of an African Continental Free Trade Area (AfCFTA) because trade integration is such a powerful tool to accelerate economic growth, create employment and alleviate or reduce poverty.

The AfCFTA provides a unique and valuable platform for businesses to access an integrated African market of over 1.3 billion people. The growing middle class, among other factors, constitutes a huge market potential in Africa.

The UK has set a priority to help African countries to insulate themselves against these pressures. Under the current circumstances, what has Russia done to help Africa? It only contributes to deepening social dissatisfaction and increases the fear of vulnerable groups among the population to rising prices of commodities and consumables throughout Africa.

With African partners, the UK has been exploring possible ways toward achieving common or mutual benefits from partnerships and consistently keeping eyes on others such as technology, infrastructure development, agriculture and industrialization, health and education, social and cultural spheres.

African leaders, governments and private sector operators are embracing these progressive efforts for boosting bilateral economic relations, with the aim of promoting sustainable economic growth. Our monitoring shows that other countries have been proactive investors in Africa in recent years.

Now, UK businesses are expanding into African countries and are luring potential exporters to raise revenue by exporting more of their services and goods to the United Kingdom. The Developing Countries Trading Scheme comes into force in January 2023 and builds on a scheme the UK, for the first part of a while, was a member of the European Union (EU).

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Africa Needs Investments, Not Food Support—Adesina



Akinwumi Adesina Sworn-In

By Adedapo Adesanya

The president of the African Development Bank (AfDB), Mr Akinwumi Adesina, has reiterated that Africa does not need food aid to feed itself but needs the right investments and seeds in the ground.

This was argued in an opinion piece penned by the former Nigerian agriculture minister, where he said that already grappling with soaring inflation and still recovering from the COVID-19 pandemic, Africa now faces a shortage of at least 30 million metric tons of food—especially wheat, maize and soybean imported from Russia and Ukraine.

He explained that fertilizer price hikes of over 300 per cent have made it increasingly difficult for African farmers to grow enough wheat, maize, rice, and other crops.

He said, “A growing number of people in Africa can no longer afford the price of bread.

“Africa is struggling to mitigate a conflict-induced famine that could throw some 30 million Africans into catastrophic levels of food insecurity. It could deepen economic stress and political unrest. With millions struggling to buy food, fuel, and fertilizer, anti-government protests are a real possibility.”

The AfDB chief explained that it was important to prevent unrest and even more human suffering through its many programmes including the African Emergency Food Production Facility and African Agricultural Transformation (TAAT) programmes.

“In May, the Bank established a $1.5 billion African Emergency Food Production Facility. In less than 60 days, it put into action $1.13 billion worth of programs under the facility, and across 25 African countries. Half a dozen more programs are expected to get underway by September as more governments apply to the facility.

“The African Emergency Food Production Facility will deliver climate-adapted, certified wheat and other staple crop seeds—and increased access to agricultural fertilizers—to 20 million farmers. Over the next two years, the facility will allow farmers to produce 38 million additional tons of food—a 30 per cent increase in local production—worth an estimated $12 billion. To facilitate even greater global investment in Africa’s agricultural sector, the facility will also support enhanced governance and policy reforms.”

He noted that it does not stop there that Africa needs the international community to fill a $200 million financing gap for the facility.

“President Joe Biden has endorsed the African Emergency Food Production Facility, and this is welcome support, as is his support for the African Development Bank’s Africa Disaster Risk Financing Program.

“To help African governments pay drought and flooding insurance premiums and respond better to food insecurity caused by climate change, the Disaster Risk Financing Program is a much-needed futures element of the Facility.

Other support, according to him, has come from Japan, international development agencies, and a growing coalition of nations.

Mr Adesina also noted that “The Africa Emergency Food Production Facility will provide an immediate solution to twin global challenges of conflict and climate change, and play immediate, medium and long-term roles in growing Africa’s agriculture sector as a foundation for resilient African economies.

“Policy reforms will help trigger structural reforms needed for market-based input distribution and to produce crops more competitively.

“Today and well into the future, the African Development Bank is delivering a proven plan to unlock Africa’s food production potential and see Africa become a breadbasket to the world.”

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Africa Gets Just 12% of Climate Change Financing



Climate Change

By Adedapo Adesanya

A new report from Climate Policy Initiative (CPI) has said that Africa is getting just 12 per cent of the finance it needs to manage the impact of climate change.

It, however, raised pressure on rich nations to do more in the run-up to global climate talks at COP27 in November.

CPI said that around $250 billion is needed annually to help African countries move to greener technologies and adapt to the effects of climate change, yet funding in 2020 was just $29.5 billion.

Wealthy countries have faced growing criticism for failing to meet a pledge made in 2009 to provide $100 billion annually to help poorer countries and the issue is likely to be central to discussions at the COP27 climate talks in Egypt.

According to the International Energy Agency, Africa has about a fifth of the world’s population but produces less than 3 per cent of its carbon dioxide emissions.

“Harnessing climate investment opportunities in Africa will require innovation in financing structures and strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen,” the CPI report said.

It cited a lack of skills, infrastructure, data and financial markets depth, governance issues, and currency risks as holding back climate investment to varying degrees in African countries.

The barriers were most numerous in central African countries, where infrastructure and access to credit are lacking and there are high risks of political and regulatory issues hampering investment, the report said.

“While these barriers are real, the perception of risk linked to investments in the African continent is often aggravated by a limited understanding of national contexts by private investors,” it said.

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