Govt renegotiates Essar deal

HARARE - Government and Essar Africa Holdings have renegotiated an improved Zimbabwe Iron and Steel Company (Ziscosteel) deal,  providing for a complete overhaul of the company’s equipment that has been lying idle for years.

The African unit of India’s Essar Group in November 2011 agreed to buy 54 percent in Ziscosteel in a deal worth $750 million, with the government keeping 36 percent and 10 percent remained in the hands of minority investors.

But re-opening of the steelmaker, now called NewZim Steel, had been held up by squabbles between the partners over ownership of mineral claims, with the government eventually agreeing to transfer 80 percent of the rights to Essar, while keeping the remainder.

The initial deal, signed by former Industry minister Welshman Ncube during the inclusive government, provided that the Indian steal giant would rehabilitate the existing obsolete equipment.

But Mike Bimha, the Industry and Commerce minister, told the parliamentary portfolio committee on Industry yesterday that because of the delays in reopening the company, some of the equipment such as the blast furnace needed to be replaced.

Bimha also informed the committee, chaired by Zanu PF Marondera MP Ray Kauokonde, that creditors who were beginning to doubt they would be paid and threatening to attach Ziscosteel properties, were only calmed when the deal was revised, prompting Essar to engage them.

He said Essar will be meeting ministry of Finance officials to finalise the debt repayment plan as well as other obligations to do with workers’ salaries.

“We agreed with Essar directors that we now have to revise the plans we initially had because the plant has been idle for too long,” Bimha said.

“Unlike the previous plan, the revised one provides for the reconstruction of the plant, bringing in 80 percent new equipment and a new blast furnace.”

Bimha said the Ziscosteel plant will be dismantled and that the production of the first tonnage of liquid steel would be witnessed in 24 months.

He said the Indian giant had engaged Chinese as well as local contractors to provide technical expertise to help in resuscitating the steel company.

“For almost two years, the inclusive government was dilly-dallying in honouring their part of the deal and the Indians were getting frustrated but we are back on track,” Bimha said.

“Essar is already in the process of doing a skills audit of the existing Ziscosteel workers to establish if some of them can be engaged before they commence full operations.”

Regarding ore from Manhize Ranch in Chivhu, Parliament was told that government was not aware of what amount of deposits were available as Essar was still exploring the ranch with the help of the Zimbabwe Mining Development Corporation (ZMDC).

While acknowledging that reopening the steel giant would take time, Bimha said it would create 7 000 jobs, most of which were lost when it closed shop in 2008.

Eric Murayi, MDC MP for Highfied, wanted to know what government was doing to ensure that the country’s ailing industries were brought back on their feet.

Bimha said because of the strategic importance of Ziscosteel, its closure had affected industries not only in the area where it is situated but the entire country.

“A survey on de-industrialisation in Bulawayo indicated that the majority of companies that closed relied on the steelmaker. Over and above that, 60 percent of the National Railways of Zimbabwe revenue came from the goods it transported for Ziscosteel,” he said.

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