Essar shelves iron ore plant construction

HARARE - Essar Africa Holdings (Essar) has put on hold plans to build an iron ore beneficiation plant in Chivhu as government delays transferring reserves to the Indian firm.

The Asian steel giant — holding a 54 percent stake in NewZim Steel, formerly state-owned Ziscosteel —indicated that it could only commence the project after getting guarantee of ownership at the fields where it has claims.

It said the beneficiation plant would enable it to raise iron content in the ore from the targeted Manhize fields in Chivhu.

However, on the other hand government is adamant that it cannot transfer the iron ore reserves to Essar before establishing the quality and quantity of the deposits.

Industry minister, Mike Bimha, yesterday confirmed the development saying the company still had issues to resolve with the Zimbabwe Mining Development Cooperation (ZMDC) and that it needed to direct its energy towards its main claim in Kwekwe.

Bimha, however, said the main reason why Essar had put on hold its previous plan was that the company was still at the stage of exploring for the ore.

“There is not going to be any mining activities by the company in Manhize in the near future. In fact it depends on what they get after they finish exploration so for now they are concentrating on Kwekwe.

“Moreover, they still have issues with the ZMDC which need to be resolved first,” said Bimha.

But information gleaned from Tandamanzi (one of the companies doing exploration work on behalf of Essar) employees, show that apart from the absence of guarantees of ownership from government, the Essar plans were largely dependent on availability of basic infrastructure — an efficient rail system, adequate power supply and other key raw materials, which are unavailable.

The employees told the Daily News that there was enough ore which could be exploited for over 24 years but Essar was insisting on guarantees.

“Exploration companies contracted by Essar finished their job a long time ago that is why you see we are no longer at work. There is a lot of ore there but Essar is hesitant to start operations because government has not shown commitment to the deal,” said one of the employees who asked to remain anonymous.

The plans have also been stalled due to the fact that the ore is difficult to mine and is rarely exploited across the globe, as it requires a lot of money and advanced technology.

It was anticipated that the setting up of the plant and the subsequent exploitation of the ore would assist in developing the local communities, create jobs and empower local firms and the people.

Essar, through New Zim Minerals, owns 80 percent of iron ore claims at Buchwa Mine, Ripple Creek and Manhize Ranch, while 20 percent is owned by government.

The Indian firm has however, rejected reserves at Buchwa Mine, saying they were too deep to exploit while those at Ripple Creek were not sufficient to recoup their investment.

Comments (2)

I think from the on-set the gvt made a mistake, ziscostel shld have gone to tender as two separate entities (Mining (iron Ore +Limestone) and Manufacturing), so that the winning tenders wld possibly not have throne us this far. Essar is bound to enjoy some monopolistic tendencies on this project and wld still press for more unattainable demands before they could even do nothing. This is obviously the historically longest talked agreement. It wld also appear that Essar does not have enough funds to kick-start the project, rather Gindhal shld have been shelved as an alternative. What are the chances of the deal collapsing and going to another tender?. Why shld the Gvt force Essar or be forced to go into an otherwise arrangement?. Asinadi haamanikidzwe, asi ndivo vega here munyika vanogona kugadzira simbi dzacho?.

gwenhamo-mutamburi - 6 January 2014

treas besrty - 6 January 2014

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