Friday, September 14, 2012

(TALKZIMBABWE) Gvt to renegotiate Essar deal

Gvt to renegotiate Essar deal
This article was written by Our reporter on 14 September, at 02 : 17 AM

GOVERNMENT is renegotiating with Essar Africa, the Ziscosteel deal to ensure it retains control of Buchwa Iron Ore Mining Company, renamed NewZim Minerals. Under the new agreement, Government wants the Indian firm to buy the rights to Bimco’s iron ore claims.

In an interview on the sidelines of the Zimbabwe Mining Indaba, Mines and Mining Development Deputy Minister Gift Chimanikire said the original US$750 million deal had to be revisited, considering that iron ore was a strategic mineral to the country.

Under the initial deal, negotiated by Industry and Commerce Minister Welshman Ncube (pictured), Essar Africa had assumed about 60 percent of NewZim Steel (Ziscosteel) and 80 percent of Bimco.

Prior to the deal, Government owned 90 percent of Zisco and 100 percent of Bimco.

“We have appointed a committee to look into the issue we once talked about — that there must be payment for the claims from the new company (Essar),” said the deputy minister.

“Government used to own, under the then Rhodesia Iron and Steel Company, all iron ore reserves because it had identified iron ore as a strategic mineral.”

In terms of the initial agreement, Essar pledged to assume Zisco’s US$340 million external debt and also revive the company. But the steelmaker remains inactive due to differences over the claims.

Government is largely concerned that the agreement gave Essar virtual control of most, if not all, iron ore rights, which are obviously more than what the Indian firm requires to revive Zisco. Had the deal stood in its original form, Essar was entitled to more than US$30 billion worth of iron reserves and had future plans to establish an iron ore beneficiation plant to export the mineral.

“When Government held 100 percent of the (iron ore) mineral it was because we were contributing to various companies to supply Ziscosteel (with iron ore),” said Deputy Minister Chimanikire.

“Government cannot hand over 80 percent (of iron ore claims). If you read in detail the agreement we saw three days ago, the 80-20 percent agreement (for Bimco), it appears the guys have 100 percent control.”

He said considering the firm’s plans to produce 150 000 tonnes of iron ore annually, when Ziscosteel (NewZim Steel) required only three tonnes, showed there was a clear intention to export.

“Government policy adopted by Cabinet is that we should make sure there is value addition.

“We cannot indulge in an agreement that is going to ensure that they would export through that pipeline they wanted to build, although they denied it.

“But we kept on arguing, since we had the evidence because the Environmental Management Agency was already doing feasibility (environmental impact assessment) studies,” said the deputy minister.

Against this background Government is still to assess how much it would give to Essar on the basis of NewZim Steel’s requirements, but the Indian firm would have to make a down payment first.

“We owe it to the future generation to ensure that Government remains with a large percentage in ownership of the mineral. We can’t sell our country on a platter, surrendering the nation over a bowl of soup.

“We also want to issue other firms with the claims to exploit. We do not want a monopoly, because we already have problems (in platinum),” he said.

Presently, Government has already issued six claims to Essar, which it said should be enough to resume operations at NewZim Steel.

Essar would also get claims commensurate with the huge debt the former steel-making giant owed foreign banks.

Asked if the fresh round of negotiations would not scupper the deal, Deputy Minister Chimanikire said there was commitment from both sides.

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