Essar, Zisco deal dithers

VICTORIA FALLS - Industry minister Mike Bimha has conceded that the revival of Ziscosteel might take longer than anticipated due to some complications in the deal.

“It’s a very complicated deal,” Bimha told delegates attending the ZNCC annual congress here on Wednesday.

“We did something unusual by going out to look for a partner who was willing to rehabilitate Zisco and take over its debt. And this on its own makes the deal very complicated,” he said.

Under a $750 million deal struck in 2011, Essar Africa Holdings (Essar) agreed to take over Ziscosteel’s foreign debt, which amounted to $300 million, and to share the domestic debt with government, which totalled $72 million at the time the deal was struck, based on the equity structure.

However, the troubled deal is yet to be implemented amid protracted re-negotiations.

Bimha also noted that disagreements that emanated in the inclusive government between 2009 and 2013 saw the investor taking a backseat on the deal.

“Over the past few months iron ore prices have remained depressed and this also impacts on the budget to re-open Zisco,” he said.

The Industry minister, who at one time said Zisco would resume operations by December 2013, said government and Essar were still committed to the deal.

“There is no going back. We are still doing our best to make sure that we resuscitate Zisco,” he said.

Ziscosteel — now rebranded to New Zimsteel — was the largest integrated steel works in Africa with a capacity to produce one million tonnes of the commodity annually, and its demise in 2008 came as no surprise due to Zanu PF government’s chronic mismanagement, corruption and maladministration of the economy.

The company, affectionately regarded as the heartbeat of the Midlands province, used to produce over 50 000 tonnes of prime iron and steel and employed over 6 000 workers.

Currently workers at the company, who have received intermittent salaries over the years, are owed more than $110 million.

Apart from resuscitating Ziscosteel, Essar also proposed to construct a 600 MW thermal plant to boost power supply to the iron processor’s plant.

However, the construction of the thermal plant is under threat after the Zimbabwe Energy Regulatory Authority (Zera) warned that it was going to cancel independent power producers (IPPs) licences — with a capacity to generate 5 000 megawatts (MW) — including Essar.

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