Implats Zimbabwe unit plans $690 mln refinery upgrade

* Platinum refinery to be upgraded in two stages

* Zimplats may import electricity for refinery

* Zimplats to use two local refineries to process its platinum (Adds detail, background)

By MacDonald Dzirutwe

HARARE, July 30 (Reuters) - The Zimbabwean unit of the world's second largest platinum producer Implats will spend $690 million to upgrade its base metals refinery, the chief executive officer said on Wednesday.

Zimplats, which is 87 percent owned by Implats, inherited a base metals refinery built in the 1990s by mining giant BHP Billiton but never used it, saying it was outdated.

Zimplats chief executive Alex Mhembere said the company wanted to construct a new refinery but pressure from President Robert Mugabe's government was forcing it to upgrade the old refinery, located 70 km (40 miles) west of the capital Harare.

Mugabe's government has given platinum companies operating in Zimbabwe a deadline of two years to set up a refinery to add value to the sector or face a ban on unrefined exports.

"It will be built in two stages. The first stage will cost $190 million ... we expect stage two will cost $500 million," Mhembere told an analyst briefing.

Mhembere said the first stage would be funded internally and Zimplats would decide whether to borrow to fund the final stage.

Zimbabwe has the world's second largest platinum reserves after South Africa. The industry currently transports its products to South Africa for refining.

Mhembere said the refinery in question had a capacity to refine 90,000 ounces of platinum annually and the company was also in discussions with two local nickel refineries to upgrade their facilities for Zimplats' use.

Pan-African AIM-listed mining firm Mwana Africa owns a nickel refinery at Bindura north of Harare while local mining group RioZim owns the Empress Nickel Refinery (ENR) in central Zimbabwe.

"We are going to cooperate, we are going to integrate our facility with their facilities. For us to be able to refine all the materials that we are producing we need to use the facilities that are either at Bindura or ENR," Mhembere said.

Zimplats recorded a 164 percent rise in operating profit to $50 million in the fourth quarter to June as production and revenue rose, the company said earlier. (Editing by Ed Stoddard)