via Zim finalises $750m Essar deal – DailyNews Live 11 MAY 2014
Zimbabwe says it has finally concluded a $750 million takeover deal of its giant iron processor Ziscosteel — now NewZim Steel — by Indian firm Essar Africa Holdings Limited.
The deal, under which Essar acquired a 54 percent stake in the Kadoma-based steel maker, was agreed to in November 2011, but stalled due to challenges including delays in the handover of iron claims.
Industry minister Mike Bimha said yesterday Essar officials “reaffirmed their commitment to the project and agreed to complete the process”.
He said the move paves way for the operationalisation of NewZim Steel and its subsidiary NewZim Minerals with immediate effect.
The resumption of NewZim Steel operations —dormant for over five years — will bring relief to more than 3 000 workers, who have gone for almost two years without salaries after Essar suspended payments in March 2012.
“The agreement heralds a new chapter in the economic growth of Zimbabwe, for all Zimbabweans and particularly for the communities in and around Redcliff and Chivhu,” Bimha said.
According to the deal, Essar would acquire 54 percent of NewZim Steel and 80 percent of NewZim Minerals, while the government would take the remaining shares in both firms.
Bimha noted that in relation to the original bid provisions, the initial phase of the project would involve the revival of NewZim Steel to a production capacity of 500 000 tonnes per annum of liquid steel within 24 months.
He said the production would be increased to 1,2 million tonnes per year in the second phase.
“In parallel, NewZim Minerals will work on exploration and development of an iron ore beneficiation project. Further, the iron ore from
Chivhu will be blended with iron ore from Ripple Creek to improve the quality of feedstock to the steel plant,” he said.
The minister added that in order to ensure that the revived steel plant was globally competitive, considerable time and effort was expended in readjusting the revival process.
“This readjustment of the plant will result in a substantial number of facilities at the plant being replaced entirely with the new steelmaking technology which will be undertaken jointly with the
Chinese and Indian Engineering Procurement and Construction contractors,” said Bimha.
NewZim Steel, a major foreign-currency earner before independence in 1980, stopped operations in 2008 at the height of an economic crisis, due to a lack of capital.
Prior to the takeover, government held a controlling stake in the steel giant — once the largest integrated steelworks in the region.