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(HERALD) Ziscosteel deal sealed

Ziscosteel deal sealed
By Golden Sibanda

Ziscosteel’s revival took a giant step forward yesterday with the Government anno-uncing it had agreed to sell part of its shareholding in the State enterprise to Mauritian firm Essar Africa Holdings.

The deal will see Essar Africa securing about 54 percent of Zisco and injecting at least US$355 million in fresh capital.

This will be through the purchase of roughly two-thirds of Government’s 90 percent shareholding in the troubled company, which ceased production in 2008 owing to financial constraints and a huge debt overhang.

The Herald can reveal that Essar will pay off Zisco’s US$240 million debt to KFW of Germany, pay US$55 million for Govern-ment’s stake and invest US$65 million in refurbishing blast furnaces 3 and 4.

The company will also invest in renewal of the coke oven battery and human skills development among other areas to rejuvenate the steel giant, which employed more than 4 000 workers at its peak.

Industry and Commerce Deputy Minister Mike Bimha said President Mugabe, Prime Minister Morgan Tsvangirai and Deputy PM Arthur Mutambara had approved Essar’s bid for the dormant steel firm.

He said engagement of a well-resourced foreign partner would relieve the Government of obligations in terms of the entire Zisco debt.

More importantly, the deputy minister said, the development will enhance Zimbabwe’s economic development through the supply of raw materials to industry, increased exports and job creation.

“I am pleased to announce that the country’s three principals agreed to and appro-ved the recommendation that Essar Africa Holdings be assigned the responsibility of comprehensively reviving the country’s steel giant, the Zimbabwe Iron and Steel Company,” he said.

Deputy Minister Bimha said the deal would soon be wrapped up.
He said Essar Holdings was expected on the ground by December and to start operations as soon as possible.

Mr Firdhose Coovadia, Essar resident director for Middle East and Africa, said: “We are delighted to have been selected as the preferred bidder for the revival and expansion of Zisco.

“We believe Zisco is well-positioned to be a low-cost steel producer that can meet the growing demands of the regional steel market in sub-Saharan Africa.”
He said Zisco was a strategic asset for Zimbabwe and Essar would make meaningful contributions to the country’s economic development.

Zisco has the capacity to produce a million tonnes of steel annually.
Mr Coovadia said Essar Holdings was on track to produce 14 million tonnes of steel a year and its excellent record in commissioning and running Greenfield and Brownfield steel plants across the world would come in handy for Zisco.

The Essar conglomerate is a leading player in the steel, oil and gas, power, communications, shipping ports and logistics, projects and minerals sectors.
It is present in 20 countries across five continents and has a revenue base of approximately US$15 billion while employing more than 60 000 people.
In Africa, the Mauritius-based firm is involved in gas and oil operations in Nigeria, Kenya and Madagascar; telecomms in East Africa; BP operations in South Africa; and coal in Mozambique.

Efforts to revive Zisco hit a brick wall in 2004 when Global Steel Holdings of India pulled the plug on a US$400 million deal under unclear circumstances.
After that, Zisco survived on selling scrap metal.

Another attempt to revive the firm failed early this year after the Presidency rejected industry giants Arcelor Mittal of South Africa and Jindhal Steel of India, because it was felt they would not adequately meet Zimbabwe’s interests.

The Midlands province-based steel giant has exclusive rights to iron ore deposits in Zimbabwe, hence the importance of its revival to low-cost steel supply, indus- trial development and economic revi- val.

Labels: ESSAR AFRICA HOLDINGS, MIKE BIMHA, ZISCO

posted by MrK @ 4:16 PM