Karo Investments under-fire over US$100m mining lease controversy

There are concerns that Cyprus-based Karo Resources which controversially entered into an agreement with Mines Minister Winston Chitando to invest up to US$4,2 billion to develop a platinum mine and refinery in Zimbabwe, did so under dubious circumstances that raise serious suspicions of corruption and looting of the country’s natural resources.

The deal, when it was announced in 2020, was expected to be the largest in the entire history of Zimbabwe’s mining industry, as Karo Resources looked at establishing a platinum project capable of producing 1.4 million ounces a year of PGM metals.

The project is located in the Mhondoro-Ngezi platinum belt, west of Harare, where Impala Platinum Holdings has operations.

Karo head Loucas Pouroulis told Reuters that the project would include a coal mine and power station to produce electricity for the smelter, and should employ 15,000 people when fully implemented.

But former Finance Minister Tendai Biti told Parliament last week that Karo Investments was given the special mining lease in breach of the terms of Section 139 of the Mines and Minerals Act which states that the investor must have US$100 million before granting of the lease.

Full Text: Tendai Biti submissions for the 2023 National Budget Debate

Biti said that the platinum producer had “nothing” but it was given the lease to the line Ministry. He further alleges that Karo Investments went on to list with Victoria Falls Stock Exchange to raise only US$34 million, way below the required amount.

“The third issue is the issue of mining. Mining can transform this country. This country can be a US$200 billion economy purely on the basis of mining but we have to do certain things right. Firstly Mr. Speaker, we cannot give away our mining rights as if they are cakes at a wedding,” Biti said.

“Anyone who wants, we give him a lithium mine. Anyone who wants, we give him iron ore. Anyone who wants, we give him diamonds. Anyone who wants, we give him platinum. Manhize is sitting on 43 billion metric tonnes of iron ore – the biggest in the world. We gave them for free.

“I was very hurt Mr. Speaker by a company called Karo Investments or Tharisa. They got a special mining lease. To get a special mining lease, in terms of Section 139 of the Mines and Minerals Act, you must show the authorities, Minister of Mines, Hon. Chitando that you have got US$100 million.

“So they came here with nothing, then they listed on the Victoria Falls Stock Exchange some bonds to raise money to mine our minerals. They raised $34 million. Are we that foolish Mr. Speaker with great respect?

“We give away our mining concession for nothing, then we allow that same person kuti korokoza tumari twedu twatinatwo muhomwe and we say we are governing the country.”

Meanwhile, Karo Mining Holdings, on Friday listed its bond on the Victoria Falls Stock Exchange (VFEX) to become the first debt instrument and 7th issuer on the two-year old bourse.

VFEX is the only exchange in Africa trading in United States dollars and was established by the Government in 2020 to attract global investment.