via Govt done with Zisco: Bimha | The Herald December 20, 2013 by Golden Sibanda
GOVERNMENT says it has fulfilled outstanding obligations that have been stalling the revival of Zisco and awaits new majority shareholder Essar Africa to meet its end of the bargain.
Industry and Commerce Minister Mike Bimha would not disclose the finer details, but pointed out that while it had taken long, Government had finally fulfilled all its obligations last week.
Government agreed in March 2011 to sell 54 percent of its shareholding Zisco to Essar to en- able revival of the mothballed firm, but a number of sticking issues have delayed the plans.
The sticking issues stalled the revival of Zisco, with speculation rife these included Essar’s concerns about guarantees on access to certain inputs critical to the revival of Zisco.
Later, it emerged Government had raised reservations that all rights to the country’s multibillion-dollar iron mineral reserves, held by Buchwa Iron Ore Company, had been given to a single investor. It was feared the scenario would shut out investment from other potential investors yet the mineral reserves held by BIMCO, now a subsidiary of Essar, were more than what Zisco required.
But Minister Bimha yesterday said Government had fulfilled its obligations, in terms of a Cabinet resolution passed this year, which had taken time due to the need to discuss and evaluate the deal structure.
“As the Minister of Industry and Commerce responsible for Zisco, I would like to say everything is on course and I am very happy with the progress (thus far). Its (Zisco) reopening is on course and very soon we will see activities starting,” Minister Bimha said.
“There are things Government was required to do in terms of the Essar-Zisco deal and these things were still outstanding. All these things were concluded last week,” the minister said.
Minister Bimha last week met representatives of Essar Africa Holdings, a Mauritius-registered sub-unit of India’s steel manufacturing giant Essar Global with diverse interests across the globe.
Delays in finalising the US$750 million deal for the reopening of Zisco has caused discomfort in certain quarters of Government in view of the firm’s potential contribution to the economy.
Finance and Economic Development Minister Patrick Chinamasa told the ruling Zanu-PF’s 14th National People’s Conference that in line with Government’s new economic plan 2014-18, the Zimbabwe Agenda for Socio-Economic Transformation, Zisco was one of quick wins to economic revival.
At its peak Zisco had capacity to produce more than one million tonnes of steel per annum and employed up to 4 000 workers before its financial plight rapidly deteriorated leading to its closure in 2008.
Earlier efforts to rejuvenate its fortunes hit a brick wall after another Indian firm, Global Steel Holdings Limited, unceremoniously pulled the plug on an imminent deal with Government in 2004.
But with hopes that the multimillion-dollar deal would bring an end to the closure of Zisco and the misery of thousands of the closed firm’s workers the deal hit a snag, raising fears it could collapse.
Initially, there were reports that progress had stalled after Essar demanded guarantees on key enablers such as access to water, electricity and coal, considered key to the revival of Zisco.
Along the way, it emerged Government had also raised reservations about parcelling out the entire stock of the country’s known iron ore reserves estimated at over US$30 billion to one investor.
Fears were that this could present problems if Government wanted to allow other steel manufacturers to invest following similar challenges encountered with a platinum mining company.
After the acquisition of 54 percent of Government’s 89 percent stake in Zisco, Essar was expected to clear US$340 million of the State’s external debt and US$22 millions in salary arrears. Among the external creditors were German bank KFW and Chinese firm Sino-Sure.