(HERALD) Minister wants Zisco, Essar deal revisited

Minister wants Zisco, Essar deal revisited
Tuesday, 19 June 2012 12:00
Zvamaida Murwira Senior Reporter

MINES and Mining Development Minister Obert Mpofu says the Essar deal must be revisited because the Indian company will pay only US$700 million for resources worth over US$30 billion

Minister Mpofu said he will transfer mineral rights of iron ore to Essar only for actual value, as part of the conditions he wants observed on the deal. He said iron ore reserves in Mwanesi near Chivhu, which are supposed to be controlled by Essar under the agreement, had a cumulative value of US$30 billion.

Giving oral evidence before the Parliamentary Portfolio Committee on Industry and Commerce, Minister Mpofu said he will not allow the minerals to be surrendered to Essar for no value in return.


He said Essar must not export iron ore and must rescind the 80-20 percent shareholding structure and comply with the country’s indigenisation policy.
He said the new shareholding structure was reaffirmed by Cabinet three weeks ago.

The committee, chaired by Buhera North MP Cde William Mutomba (Zanu-PF), wanted to know from the minister what had stalled progress at NewZim Steel, a joint venture between the Government and Essar.

Minister Mpofu said it was unfortunate that his Industry and Commerce counterpart Welshman Ncube did not involve the Mines Ministry up to the signing and commissioning of the Essar deal, despite it being the custodian of mineral resources.

Minister Ncube told the committee recently that the Mines and Minerals Act did not provide for valuation of minerals before a licence could be granted.

He said it would be unprecedented and unfair for one to require that the value of mineral deposits be used in determining what an investor should pay.

Minister Ncube said that criteria was never used on diamonds and platinum.

In his evidence yesterday, Minister Mpofu said he was not privy to all provisions of the agreement between Government and Essar, but had managed to get some “bits and pieces” through informal means.

“The Ministry of Mines was not at all involved in the deal and did not know about the agreement,” he said.

“That’s why I did not even attend the launch. The ministry got to know through Press releases some of them relating to the need for us to transfer mineral rights to NewZim Steel Minerals.”

Minister Mpofu said his ministry was surprised when Essar submitted a “long list” of mining claims it wanted transferred to NewZim Minerals in terms of the agreement they signed with the Government.

He said there was no proper valuation of the minerals to be transferred to Essar because his ministry was not involved in the deal.

Essar’s interpretation of the agreement, he said, was that mineral claims to be transferred should be those that belonged to Zisco and Bimco and its subsidiaries.
“However, the list submitted by Essar was too long and initial concern was that the list could contain claims outside the agreement,” said Minister Mpofu.

“The Ministry of Mines felt caution had to be exercised before wholesale transfer.”
Cabinet, Minister Mpofu said, had since directed that a transfer be made of the iron ore in terms of Mines and Minerals Act which would see a joint venture between Essar and the Zimbabwe Mining Development Corporation.

A Memorandum of Understanding allowing Essar to draw water from Munyati River was rejected by Cabinet three weeks ago, he said.

Minister Mpofu expressed concern on why NewZim Minerals, wanted a lot of minerals including those in Mwanesi, yet its mandate was to revive Zisco, a steel producing firm in Redcliff and could use Ripple Creek Mine and Buchwa Mine which have deposits lasting more than 25 years.

He said it was during discussion with Minister Ncube that he came to know that while NewZim Steel had a 60-40 percent shareholding structure in favour of Essar, the NewZim Minerals had a 80-20 percent in favour of Essar.

“This is totally against the indigenisation and economic empowerment policy and the Minister of Industry and Commerce did not give a satisfactory answer on how they arrived at this,” he said.

“I am there to protect Zimbabwe’s mineral resources for future generations.”

Minister Mpofu said some people wanted to ride on the plight of Zisco workers who are not being paid salaries to exert pressure on the Ministry of Mines to accede to a deal that is skewed in favour of foreigners.

On Zimplats, Minister Mpofu said he had since written to the company to cede part of their land, saying the platinum firm would need more than 500 years to exhaust exploiting the vast mineral deposits.