Hope for NewZimsteel workers rekindled

via Hope for NewZimsteel workers rekindled | The Financial Gazette 26 Sep 2013

REDCLIFF — Workers at New Zimbabwe Steel (NewZimsteel) are hoping that the new administration will come to their rescue by expediting the implementation of the Essar deal.

Essar Holdings, a conglomerate from India, acquired 54 percent of the then Zimbabwe Iron and Steel Company (ZISCO) from government in September 2011, in a deal worth a whopping US$750 million.

This followed the closure of the giant steelworks in 2008, at the height of the economic meltdown.

NewZimsteel is the backbone of Redcliff, which is about 220 kilometres south west of Harare.

At the time of the acquisition, Essar announced plans to increase production at New Zimsteel  to 14 million tonnes a year from peak production levels of close to a million tonnes of steel a year.

Under the deal, Essar also acquired 80 percent of Zisco’s mineral assets in Mwenezi, Buchwa and Bimco although government is yet to transfer the mining rights to it.

Essar was expected to spend more than US$436 million to revive NewZimsteel.

As part of the deal, Essar had also committed to taking over a US$340 million debt owed by the former ZISCO to foreign entities such as KFW of Germany and Sino Sure of China.

But two years down the line, operations are still to commence at the renamed NewZimsteel.

This has resulted in the 2500 strong workforce at NewZimsteel going for months without salaries.

Downstream industries as well as the two local authorities of Redcliff and Kwekwe have also bore the brunt of the continued closure of the steel giant.

Kwekwe Council is owed US$12 million and at one point mulled taking legal action before it eventually disconnected water supplies.

Water supplies had to be restored to ease the plight of residents in Redcliff and avert a possible health crisis.

Much of the bickering over the deal was blamed on the shaky coalition government, which collapsed last month soon after the swearing in of a new administration.

The deal, which was brokered by Welshman Ncube, leader of the smaller formation of the Movement for Democratic Change who was then the minister of industry and commerce could not take off the ground as some ZANU-PF politicians threw spanners into the works as they felt that Ncube would gain mileage from it ahead of the watershed elections held on July 31.

Others sabotaged the transaction as they felt some within the inclusive government could have irregularly benefitted from it in their personal capacities.

The impasse that followed saw a committee to oversee the implementation of the deal being set up under the chairmanship of the President’s Office. But nothing has materialised ever since.

Benedict Moyo, the chairperson of NewZimsteel’s Joint Workers Union, said the death of the inclusive government has given way to renewed hope.

“We are happy that we have only one party in government since nothing was achieved by the inclusive government. We also welcome the appointment of Mike Bimha as Minister of Industry and Commerce since he was the deputy in the previous government and therefore there will be continuity as he understands the whole matrix to the Essar deal.

“As workers, we urge the new government to expedite the process as over 2500 families are suffering as we are not getting anything from Essar except for 50 percent of our salary which we got two months ago to get us going,” Moyo said.

The incoming Industry Minister said the Essar deal was one of the issues which are top of his priority list.

He will however, act only after receiving recommendations from the implementation committee.

He said; “Of course the New Zimsteel deal is one of our major priorities as the new government but it will be premature for me to comment at the moment since we are still going through inductions but I will be able to answer your question satisfactorily next week.

“What I can say though is that the deal was approved and a committee to implement the deal under the chairmanship of the President’s Office is working on the implementation modalities of the deal. I will await the report by the committee before mapping the way forward.”

 

COMMENTS

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    Jogo Bonita 7 years ago

    It was said the lack of progress on zisco was due to bickering in the gnu.that the gnu is no more lets wait and c