Wesizwe Platinum and Jinchuan Group

Image source PANOS PICTURES

China Development Fund has provided $227 million in equity finance for Jinchuan Group's African projects, taking 51% of the company's shareholding. While China Development Bank provided $650 million in project finance (debt at commercial rates). Jinchuan Group is a Chinese State owned company based in Gansu Province. The company is the largest producer of red copper and nickel in China. The financing will fund the Frischgewaagd-Ledig project, which is a major platinum mining project near Sun City in South Africa. The project was originally in the hands of the South African firm Wesizwe Group, but the group lacked the funds to finance the mine.

CADFund invested in the project despite considerable internal strife within Wesizwe Group, which led to the CEO Michael Solomon being fired then reinstated in order to ensure the confidence of the Chinese investors. A group called Musa Capital, a shadowy organisation controlled by two US citizens, Musa stands accused of moving ZAR 70 million of funds out of the Wesizwe Group (which it part owned), when the missing funds were investigated, Musa Capital attempted a takeover, which led to the firing and rehiring of Michael Solomon. The project is a typical CADFund project, which supports a Chinese company working with a local partner.

The Frischgewaagd-Legig project feasibility study shows that platinium production could be as high as 415,000 ounces a year, which is around double Jinchuan's current production levels. The deal is structured in a way which gives Jinchuan rights to the smelting and refining of the platinum produced. Phase one of the project started in July 2010, and production is expected to be stepped in 2011.