Published On: Mon, Apr 8th, 2013

Zim’s investment risk over-priced: Essar

Johannesburg, April 08, 2013 – The risk of doing business in Zimbabwe has been over priced and yet it is an easier place to do business than most people think, Firdhose Coovadia, Essar’s resident director for Africa, Middle East and Turkey, has said.

In an interview with reporters here, Coovadia said: “Foreign investors need to come and have a look at the country. In my mind the risk has been over priced,” he said. “Once you are on the ground you will find that Zimbabwe is an easier place to do business than you think.”

He said the greatest asset for Zimbabwe was the high literacy among the skilled workers although there was need for more skills training.

Essar, an Indian global company, emerged as the preferred bidder for Zisco in 2011 after an international tender had been issued by government. It set up New Zim Steel, to revive the steel making capacity at the currently not functional Zisco plant and New Zim Minerals, which would explore beneficiation of iron ore that is owned by Zisco Steel and create value so that the country becomes a world leader in beneficiated iron ore.

“The country provides significant opportunities to investors across many industries. I believe beneficiation in the country is a crucial part of taking Zimbabwe to the next level. Re-distribution of wealth and opportunity is a key part of taking this country to the next level. You need to bring more Zimbabweans in the mainstream economy.”

“Yes there are challenges, in our particular case bear in mind we are dealing with a national asset, its an emotive asset. A lot of people have an opinion on that asset. But for an average investor dealing with the private sector on a smaller asset perhaps or less emotive asset, I don’t think you have many issues in doing business in Zimbabwe.

The company would partner with the government in the multi-billion beneficiation project.

“We have agreed a 20 percent equity interest for the government in the whole beneficiation project which is a multi billion project. This will be done so that people of Zimbabwe and successive governments will have enduring legacy on that iron ore resource and that it wouldn’t be diluted over time. It will be developed with the national priorities in mind and industrialisation in mind.”

He said so far no exploration had been done on the iron ore resources, adding figures currently thrown around were not substantiated by any geological data. He said the value of $30 billion that had been floated was way off the mark.

The company has committed $450m in reviving the steel plant, $240 m in settling foreign debt and $170 m to settle local debt, which included primarily workers’ salaries that had not been paid for a long time.

But he warned that if availability of coal, power, rail, water is not there that steel plant will fail again.

He commended the Zimbabwean workforce which he said was courteous, positive and proudly Zimbabweans committed to rebuilding the industrial future of the country.

“In a nutshell the country has got a lot of good things to look forward to,” said Coovadia.

Once one of Africa’s leading steel producers with capacity to produce up to one million tonnes a year, ZISCO stopped operations in 2008 at the height of Zimbabwe’s economic and political crisis due to a lack of funding.