Steelmaker pins hope on Essar deal success

KWEKWE - Prospects of enhanced steel manufacturing are expected once Zimbabwe concludes the multi-million dollar Essar Africa Holding Limited investment deal, a top Steelmakers official has said.

Alexander Johnson, group general manager of the Redcliff-based steel manufacturing company Steelmakers, told the Daily News the successful conclusion of that mothballed deal will roll out several opportunities including job creation.

A multi-million deal between the multinational Essar and the government to revive one of the largest steel manufacturing plants in Southern Africa at Redcliff has been thrown off the rails by bureaucratic bungling and ructions among Industry and Mines ministry officials.

The Essar deal was initially aimed at reviving Ziscosteel which is facing liquidation due to a throttling debt of over a $100 million.

It gave Essar 54percent control of the new company NewZim Steel. 

The deal has an additional traction committed to infrastructural development where the company would also invest millions of dollars into a 552km railway line stretching from Mwanesi to Savannem in Mozambique.

“Success of the Essar arrangement will boost our capacity because we initially came here in 1996 because of raw materials from Ziscosteel,” said Johnson.

“The success of Essar deal is a welcome development. We stand to benefit as a company and the nation is further guaranteed of a sustainable employment base.”

Steelmakers is currently operating below capacity by 20 percent.

Revamping Ziscosteel will allow the company to bounce back to its original plan with the assurance Ziscosteel will automatically boost the company’s output.

Johnson said he was currently in discussion with the long awaited Indian investors.

The company is eagerly looking forwards to Essar’s coming on board and Steelmakers have pledged to help the investor acclimatise.

“We will assist with possible resources to help them get used to the local environment. And this is solely directed at improving the steel manufacturing sector,” Johnson added.

Operations at the steel company are currently at 80 percent, with rolling mills operating at 40 percent, owing to a shortage of billets.

“Despite shortages in feeding stocks, our company has proved its consistence in uplifting lives of the local people. Moreover, we gradually increased our manpower since 2008, from 800 workers in the past to 1 100 in both direct and indirect employment,” Johnson explained.

Johnson cited the gentleman’s agreement between Essar and his company that will limit Essar to manufacturing heavy duty I and H beans of high cost, while Steelmakers will stick to low cost products.

“Essar showed interest in dealing with heavy duty steel products. Considering the understanding we have on supply of material and product rationalisation, we will not produce similar products because we decided to share product range,” he explained.

Steelmakers who were attracted by the availability of billets, a semi-finished steel product, relocated from Kenya to Zimbabwe 17 years ago and currently the company is the largest steel exporter into that country.

“We remain one of the favourite exporters to Kenya and all the countries where we are exporting our steel. As Steelmakers, we also take our 153 steel products to South Africa, Zambia, Malawi, and Democratic Republic of Congo (DRC) among other countries,” Johnson said.

The company, which needs $20 million to re-capitalise in order to meet its 100 percent operating capacity, said it expected to meet demand on its product over the next five years without soliciting for government “market protection” against external forces.

“We need no immunity from government. Government is only an enabler. As a company it is our belief that put high quality and manufacturing standards products that meet international standards.

We are now operating in an open market. There is no need to be protected against companies from abroad neither do we expect that product comes with tariff removal to allow free and fair trade.

Steelmakers, is using its product quality, standard in service delivery and a good brand.

“To an extent this has been influenced by influx of products by South African companies which are dominating the local market,” said Johnson whose company is in the process of accrediting with the South African Bureau Services (SABS).

But Steelmakers are lobbying government along with other steel manufacturing companies for the removal of the 0,87percent total value proceeds value after sale that exported products currently attract.

“The taxation has been because steel is regarded a mineral and not as a finished product. All we are saying is it should be changed for us to export freely as a finish product.”

Johnson said sanctions largely affected his company, he said.

Steelmakers is not listed on the “sanctions list” but the listing of Mineral Marketing Corporation of Zimbabwe has denied the company access to market its products on the export market.

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