Maravi

(NEWZIMBABWE) Ministers trade blame as ZISCO deal threatened

Ministers trade blame as ZISCO deal threatened
14/05/2012 00:00:00
by Staff Reporter

INDUSTRY and Commerce Minister Welshman Ncube has blamed his Mines counterpart as it emerged Ziscosteel’s US$750 million takeover by Essar Africa teeters on the brink of collapse with the Indian company being forced to suspend the payment of salaries.

Essar Africa acquired a 60 percent interest in the Redcliff-based steelmaker and about 80 percent of its mining subsidiary, Bimco, last year. The company was renamed NewZim Steel Ltd.

The takeover was expected lead to the revival of the steel giant which had been virtually comatose since 2009 when production stopped due to a combination of massive debts, mismanagement as well as moribund plant and equipment.

But nearly a year later, Essar has yet to resume operations as it awaits the finalisation of the deal which appears to have stalled over the transfer of BIMCO’s iron ore claims.

The hold-up has now forced NewZim Steel to stop paying salaries for its 1,500 employees – which it had done since January last year – because of the lack of production.

“Essar are saying the government is yet to conclude the deal it entered with the Indian company and they have pumped a lot of money so far in salaries at a time when there is no production,” a representative of the workers was quoted as saying in the state-run Herald newspaper.

“A delegation of workers went to Harare last week and met Minister Ncube and the Essar board chairman. They wanted to know the reasons for the suspension of salaries and the delay in the conclusion of the deal.”
Ncube confirmed delays in the transfer of mineral rights was stalling ZISCO’s revival.

“I did meet the employees. Essar is saying we have been paying salaries since March last year and we (the government) are failing to sign a document transferring mining rights,” he said.

He also warned that the deal could collapse unless his Mines Minister Obert Mpofu facilitated the transfer of the iron ore reserves to Essar insisting: “We are taking 14 months to sign a document which in a normal country should take a week.”
But Mpofu said the delays had nothing to do with him: “That issue does not fall under my ministry. Talk to Ncube.”

An Essar official said last month that the company was ready to start operations once the transfer of assets was completed.

“We are already on the ground and hope to start work in the next few weeks,” Firdhose Coovadia, Essar’s director for the Middle East and Africa said, adding the company was prepared to invest up to US$4 billion in the revival of Zisco as well as development of other mining and beneficiation activities.

“We will invest $1 billion in a steel plant to achieve annual production of 1,2 million tonnes, $100 million on ore reserves that have not previously [been] explored and $3 billion to create a world-class beneficiation plant and a separate power plant,” he said.

Labels: ESSAR AFRICA HOLDINGS, OBERT MPOFU, WELSHMAN NCUBE, ZISCO

posted by MrK @ 6:14 PM