Essar wants ore — analysts

HARARE - The Zimbabwean government should maintain its position to bar Essar Africa Holdings (Essar) from exporting raw iron ore, a leading mining expert said.

Paul Jourdan — an independent South African mineral policy analyst and former Mintek chief executive, last week told the Zimbabwe High level Economic Forum in Victoria Falls that government could have been tricked by the global firm into believing the company wanted to revive Zisco Steel when in actual fact the firm was looking to gain control of huge iron ore deposits.

“I support the Zimbabwean government on that. I mean Essar is not interested in Zisco. This, the 33 billion tonnes of iron ore deposits at Mwanesi, is what they came for. I am so happy it didn’t go through,” he said.

Jourdan said government fell prey to Essar because of problems in the tendering process.

“Government should have gone for public tender because this way you get the best market deal and not when Essar comes knocking through the back door.”

This comes as the March 2011 $750 million steel production deal between government and the Government of Zimbabwe is yet to be fully consummated on account of outstanding guarantees to do with iron ore claims.

The government/Essar partnership created NewZim Steel — formerly Zisco Steel — in which Essar owns 54 percent while government and small private players account for 36 percent and 10 percent respectively.

Essar has been seeking full transfer of iron ore rich Mwanesi Ranch claims in western Chivhu to start operations after the state guaranteed uninterrupted water and power supplies, together with tax and duty incentives on capital goods.

Some of the Mwanesi deposits are in dispute after former Bimco — now NewZim Minerals — employee Roderick Mumbire claimed ownership of most of the 41 000 hectare land through his Bearable Prospects.

He said the expired grants 2 104 and 5 123 covering the entire reservations on the Mwanesi deposit will be renewed under the name, New Zim Minerals for exploration purposes only and subject to conditions determined by his department.

In June, Mines minister Obert Mpofu however, said government’s decision not to give NewZim Mineral Mwanesi claims was premised on the fact that it feared raw ore would be exported.

“We are aware of Essar’s plans to make a tube to transport ore to Beira and we are saying we will give them iron for sustaining Zisco operations and not to export,” he said, adding the current deposits that have been handed over to the new mining firm were enough to sustain Zisco operations for up to 35 years.

Government in June also blocked Essar from taking water from Munyati River in what Mines minister Obert  Mpofu said was a plan to run a pipeline that will be used to transport iron ore to Beira.

Also in June, government announced plans to reverse its initial 20/80 percent partnership with Essar and acquire majority shareholding in NewZim Mineral.

“The current 80-20 percent ownership of the minerals should be realigned in line with indigenisation,” Mpofu said, posing a new hurdle on the steel production deal.

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