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FILE - Workers return from a shift at Zimplats' Ngwarati Mine in Mhondoro-Ngezi, May 30, 2014.

HARARE (Reuters) - Russian-Zimbabwean platinum venture Great Dyke Investments (GDI) requires a further $500 million for the first phase of its Zimbabwean mining project and is in advanced financing talks with Russian and South African lenders.

Zimbabwe is pinning its hopes on the mining sector to drive the recovery of an economy grappling with rolling power cuts and shortages of foreign exchange and fuel.

Russia’s Vi Holding, through its JSC Afromet subsidiary, owns half the shares in GDI, which is developing the Darwendale platinum project near Harare, while Zimbabwe’s Landela Mining Venture (Pvt) Ltd owns the rest.

Landela is a subsidiary of commodity trading firm Sotic International Ltd, linked to Zimbabwean fuel tycoon Kudakwashe Tagwireyi, one of President Emmerson Mnangagwa’s advisors.

Former Implats chief executive David Brown is the new GDI chairman, the company said.

Tagwirei did not respond to calls to his mobile phone. Brown could not be reached for comment.

The Darwendale project is located in the mineral-rich Great Dyke belt and had initially earmarked $400 million for the first phase of the project. It aims for the mine to start production in 2021 and at its peak to produce 860,000 ounces of platinum group metals and gold per year.

Last year, Zimbabwe produced 978,692 ounces of platinum.

Zimbabwe is seeking to exploit its reserves of platinum, which is used in catalytic converters to limit auto emissions, at a time when vehicle manufacturers are boosting production of electric cars powered by lithium batteries.

GDI said in a statement its lead financial arranger African Export-Import Bank was targeting financial closure for the syndicated funding by March 31, 2020.

“Advanced negotiations are currently underway with a number of South African, Russian and Zimbabwean financial institutions to participate in the syndicate providing funds for equipment, machinery and services procurement,” GDI said.

GDI was also finalising contractual terms with foreign and local contractors, suppliers and service providers.

Brown said in a statement that the Darwendale project had potential to become a significant low-cost PGM producer.

Anglo Platinum and Impala Platinum Holdings already mine platinum in Zimbabwe. Impala also owns a joint-venture mine with Sibanye-Stillwater.

Karo Mining Holdings, part-owned by South Africa’s Tharisa Plc, plans a $4.2 billion platinum mining venture, while Bravura, owned by Nigerian billionaire Benedict Peters, was given a concession to explore for platinum in May. (Reporting by MacDonald Dzirutwe Editing by Emelia Sithole-Matarise and David Holmes

Finance Minister Mthuli Ncube

HARARE (Reuters) - Zimbabwe plans to cut value added tax (VAT) from January to stimulate consumer demand in an economy set to a contract this year after a drought and power shortages, Finance Minister Mthuli Ncube said on Thursday.

The southern African nation is in the grips of its worst economic crisis in a decade, marked by shortages of foreign currency, fuel and rolling power cuts lasting up to 18 hours a day.

Presenting the 2020 budget to parliament, Ncube proposed cutting VAT to 14.5% from 15% effective January 2020. He also proposed lowering the corporate income tax rate to 24% from 25%.

President Emmerson Mnangagwa, who took over from the late Robert Mugabe in 2017, is struggling to convince the population that his economic reforms will work.

Everyday life is increasingly difficult. Prices of basic goods, fuel and electricity have risen sharply while salaries have lagged behind.

That trend could continue after Ncube said he would from next January remove subsidies on maize and wheat, the two most consumed crops in Zimbabwe.

To give some relief to Zimbabweans who have seen their incomes eroded by inflation, which economists estimate at 380%, Ncube also raised non-taxable monthly income to 2,000 Zimbabwe dollars ($130) from 700 Zimbabwe dollars.

Ncube painted a rosier outlook on GDP growth, forecasting that the economy would grow by 3% next year after a projected contraction of 6.5% this year, helped by better agricultural output and electricity supplies.

He also said the country’s budget deficit would narrow to 1.5% of gross domestic product (GDP) in 2020 from 4% of GDP this year as the government keeps spending in check. (Reporting by MacDonald Dzirutwe Writing by Olivia Kumwenda-Mtambo Editing by Frances Kerry)

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