Impala Platinum Holdings Ltd., the world’s second-largest producer of the metal, will push ahead with a $500 million expansion in Zimbabwe even as talks with the government about black-ownership rules continue.

Impala said in March that it approved the project, pending clarity on the so-called indigenization law. Zimbabwe may cancel business licenses held by foreign companies if they don’t meet a requirement to cede 51 percent ownership to black Zimbabweans, Empowerment Minister Saviour Kasukuwere said last month.

Zimplats, Impala’s local unit, took the decision to push ahead with the investment “based on existing agreements with the government of Zimbabwe and despite the fact that discussions are still ongoing on certain key issues,” Impala said in a stock-exchange statement today.

Zimbabwe, second to only South Africa in terms of platinum reserves, is recovering from a decade-long recession that followed President Robert Mugabe’s seizure of white-owned commercial farms to redistribute to black subsistence farmers deprived of land during colonial rule.

Zimplats decision to push ahead with the expansion will add about 2 million metric tons a year of underground mine production, Impala said in a March presentation to analysts. The first phase of the expansion added 80,000 platinum ounces at a cost of $349 million, it said at the time.

‘Bold Move’

“It’s a bold move,” said Renaissance Capital analyst Anthea Alexander by phone today from Harare, Zimbabwe. “Perhaps they’ve had separate negotiations with the government.”

Zimbabwe hasn’t seen an investment on this scale for at least 10 years, said Sheila Galloway, financial manager of Utho Capital, a Johannesburg-based company that finances projects in the country, by mobile phone.

Zimplats still needs government approval to proceed with the expansion and has yet to organize funding, Impala said.

Impala’s platinum production declined to 368,000 ounces during the three months through March, from 385,000 ounces a year earlier, it said.

Shares in the company rose 2.75 rand, or 1.4 percent, to 196.75 rand at the close in Johannesburg, giving the company a market value of 124.3 billion rand ($16.4 billion).

Impala, which operates the world’s biggest platinum mine in South Africa, produced 1.7 million ounces of platinum during the 2009 financial year. Anglo Platinum Ltd. is the world’s biggest producer.

By Bloomberg