ACQUISITION of controlling shareholding in Ziscosteel by Mauritius based Essar Holdings will be expedited now that President Mugabe has appointed Cabinet, newly appointed Industry and Commerce Minister Mike Bimha has said.
Minister Bimha said Government had earlier appointed a committee to look at resolving outstanding issues regarding Essar acquisition of a 54 percent interest in the State enterprise and the committee was still ceased with the assignment.
“Cabinet approved the deal and there are certain resolutions that were made. There is a committee entrusted with the implementation of provisions of the resolutions and that has been going on,” Minister Bimha said.
“I think what is going to happen now is acceleration of pace because with elections, all these other issues things tend to move slowly,” the minister added.
But Minister Bimha would not comment on reports that while the deal for the acquisition of a stake in Ziscosteel by Essar would definitely go ahead Government had taken the position that the firm should pay for the mineral resource. Revival of Ziscosteel remains of paramount to industrial recovery and employment creation Redcliff where it is based and growth of the economy in general. Essar agreed with Government in 2010 to acquire about 54 percent of Government’s shareholding in Ziscosteel for a total consideration of US$750 million, but the initial agreement excluded the value of the iron ore reserves. Mothballed Ziscosteel which is 90 percent owned by Government relied on feedstock from Buchwa Iron Ore Mining Company, which was entirely State owned.
BIMCO owns most of the known iron ore reserves in the country estimated at over US$30 billion, but this had not been accounted for in the sale of Ziscosteel.
It is against this background that Government reportedly felt that it was not getting the full reward for relinquishing its stake in the former steel manufacturing giant that ceased operations in 2008 due to funding constraints.
The deal was expected to see Essar Holdings securing about 54 percent of Ziscosteel and injecting at least US$355 million in fresh capital into the company.
Essar pledged to pay off Zisco’s US$240 million debt to KFW of Germany, US$55 million for Government’s stake and invest US$65 million in refurbishing blast furnaces 3 and 4. It would also invest in renewal of a coke oven battery and human skills development among other areas to rejuvenate the steel making giant, which employed 4000 workers and produced one million tonnes of steel per year at its peak.
Further, the Mauritian conglomerate, owned by Indian global steel making giant Essar Global, made a commitment to invest up to US$4 billion towards building a beneficiation plant in Chivhu where BIMCO hold huge iron ore reserves.