Essar to build 600MW plant

HARARE - Indian firm Essar Africa Holdings Limited (Essar) plans to build a 600 megawatt (MW) thermal power plant in Zimbabwe.

The plant is expected to boost power supply to iron processor, NewZim Steel, formerly Zisco Steel.

This comes as Zimbabwe has concluded a $750 million takeover deal of Ziscosteel by Essar.

The deal, under which Essar acquired a 54 percent stake in the Kadoma-based steel maker, was agreed to in November 2011, but stalled due to challenges including delays in the handover of mineral rights.

Firdhose Coovadia, an Essar director, on Friday said NewZim Steel will consume 300MW generated by the plant while the remainder would be sold to national power utility Zesa Holdings.

“Our initial plan was to build two 300MW thermal plants, but due to limited resources in the first phase we will construct one plant that will guarantee undisturbed power to NewZim Steel.

“We will then build another plant in the second phase and we will sell the 300MW to Zesa,” he said.

Industry experts assert that the setting up of a power plant was a giant step by Essar towards making the plant self-sufficient as the group is always keen on leveraging its expertise in an array of sectors to make its investments profitable.

This is not the first time that Essar has built a power plant to steer its operations.

In 2007, after acquiring Algoma Steel in April 2007 for $1,63 billion in Ontario, Canada, Essar established a 100MW power plant based on waste gas to reduce costs.

The latest development comes after Essar indicated it would build a half-a-million tonne steel plant in Zimbabwe for $650 million in two years, revising its initial deal with Zimbabwe.

The initial plan was to upgrade the existing Kwekwe steel plant and produce 1,2 million tonnes of steel.

However, the deal immediately stalled when the government refused to give Essar mineral rights after it formed and owned 80 percent of shares in iron ore mining firm NewZim Minerals.

In December last year, government finally agreed to grant NewZim Steel the rights to the iron ore deposits in Mwanesi, 150km south of Harare.

Coovadia noted that Essar had resolved its issues with the government and had chosen Chinese and Indian engineers to build the steel plant.

“After a significant review, we came to the conclusion that the plant needed substantially new rebuilding, meaning new blast furnace...new lime plant and new oxygen (plant).

“The investment is in new technology because it makes the per tonne production of your steel more globally competitive,” he said.

Coovadia said Zimbabwe’s current steel consumption was 100 000 tonnes a year, which would leave the remainder for export.

Industry minister Mike Bimha last week announced that government and Essar had finally agreed to kick-start operations at NewZim Steel “with immediate effect”.
“The agreement heralds a new chapter in the economic growth of Zimbabwe, for all Zimbabweans and particularly for the communities in and around Redcliff and Chivhu,” Bimha said.

The resumption of NewZim Steel operations — dormant for over five years — will bring relief to more than 3 000 workers, who have gone for almost two years without salaries after Essar suspended payments in March 2012.

 

Comments (4)

While we are optimistic that this time around ZISCO/ESSAR is really getting back to producing steel, it pains me to note that it took all of six years for government to finally agree to their terms. The same agreement terms that were signed by the then Minister of Industry, Welshman Ncube. The only change is the signature on the paper, this time being that of Bimha. All the while people were suffering in Redcliff and Kwekwe going for months on end without any pay. Children had stopped going to school while all the bickering was going on.

Dr Know - 12 May 2014

General knowledge even for a person who never sat on a school desk will inform you Kadoma is not in Kwekwe and most definately not in Redcliff either. Where is this power plant going to be built by the way, is it in Chivhu or in Kwekwe. This is a clear case of arrogance of some people who stay in Harare that as long as it is not happening in Harare, they will just say Zimbabwe.

Sinikiwe Shumba - 12 May 2014

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water - 13 May 2014

I am also planning to build a refinary for the platinum industry to the value of $5B as well as thermal power station with 1500 MWe output at Sengwa coal fields. kikikikikik Keep on dreaming Zimbabwe but all this isnt news and it isnt new either.Nothing will ever be built here.

Gunguvo - 15 May 2014

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