* Working to iron out sanction issues on Zimbabwe project
* Study saw long-term Bokai output at 400,000 oz/yr
* Group hopes to build up platinum as new division
(Adds details, quotes)
By Eric Onstad
LONDON, Oct 7 (Reuters) - Kazakh mining group ENRC ENRC.L is keen to add platinum to its production portfolio, working to overcome hurdles for its Zimbabwe project as it pushes forward a diversification strategy, a top official said on Thursday.
London-listed ENRC got its Bokai project in Zimbabwe through last year’s takeover of CAMEC.
“The Bokai platinum project is one of the best projects in the industry. It’s shallow, the grades are not bad, and it’s right down at the bottom of the cost curve,” Chief Commercial Officer Jim Cochrane told Reuters.
ENRC owns 60 percent of Bokai, but its joint venture partner, the Zimbabwe Mining Development Corporation, is under international sanctions.
“We are determined to develop the project as soon as possible and continue working towards being able to take it forward,” he said in an interview ahead of LME Week.
The United States and European Union imposed sanctions on state firms in Zimbabwe and travel restrictions on President Robert Mugabe and dozens of his associates nearly 10 years ago after a violent re-election campaign and at the start of commercial farm seizures.
Mugabe was forced into a power-sharing deal last year with opposition leader Morgan Tsvangirai that has stabilised the economy after a decade of decline.
Before ENRC’s takeover, CAMEC had said phase one of Bokai would cost about $250 million to produce 160,000 ounces a year, with production later rising to 400,000 ounces.
ENRC was re-evaluating the size of the first phase, but nothing has been decided, said Cochrane, who is also an executive director of the company.
“If you’ve got a good project, then really we would like to scale it up as much as we can,” he said.
Zimbabwe is the world’s second biggest source of platinum deposits after South Africa.
ENRC has been on a takeover spree over the past year, spreading its wings into Africa and Latin America while also launching copper and cobalt production.
Platinum is envisaged as a key pillar in ENRC’s long-term plan, adding to a mix of minerals that is now dominated by ferrochrome and iron ore. “Platinum is a metal that we like... the barriers to entry are very high and the consolidation is relatively high in the sector,” Cochrane said.
“If you said to us, ‘Would we like in five to 10 years to have a decent-sized, material platinum division in the company?,’ we’d be very happy to.” Implementing the strategy would depend on finding good-valued assets, he added. In April, ENRC bought a 12.2 percent stake in South Africa’s Northam Platinum (NHMJ.J) from majority owner Mvelaphanda Resources MVLJ.J and since then has increased its stake to 14.35 percent. [ID:nLDE63P19Z]
Mvelaphanda, a holding company, plans to dissolve itself and unbundle its stakes, including shares in Northam.
“When we bought it, to a large extent we were preserving an option to enter the platinum sector in a bigger way. We are watching the situation carefully,” Cochrane said.
In addition to operating a deep-level mine, Northam owns the Booysendal project, one of the world’s biggest undeveloped platinum deposits with resources of over 100 million ounces.
Its shallow structure is attractive since most South African mines are having to dig deeper to find more material.
“You have to look long-term in this business. Eventually Northam has a resource base that’s actually going to get shallower over time rather than deepen. I think that’s quite unique in the platinum sector.”
Coal is another potential new sector that ENRC got when it bought Central Africa Mining and Exploration Co. (CAMEC) last year for $955 million.
ENRC has 12 licences covering over 230,000 hectares in Mozambique’s Zambezi basin, one of which, project Estima, has a resource of 1 billion tonnes. Drilling is continuing and “it’s looking very optimistic”, Cochrane said.
Since several companies such as Brazil’s Vale VALE5.SA, are already developing mines in the basin, infrastructure will not be a problem, he added. (Reporting by Eric Onstad, editing by Anthony Barker)