HARARE – India-based Essar Holdings (Essar)'s top management is in the country to conclude the $750 million deal aimed at reviving NewZim Steel, Industry minister Mike Bimha has said.
“Senior partners in Essar were here yesterday (Tuesday) and they met with officials in my ministry as well as officials in the Mines ministry. Minister Walter Chidhakwa and I are very much committed and we would like to see finalisation of this deal,” he said.
In 2011 Essar acquired a 54 percent controlling stake in the Zimbabwe Iron and Steel Company (Ziscosteel) which has since been rebranded NewZim Steel, after agreeing to pay the government about $750 million for a controlling stake in the steel project.
The transaction also included giving Essar 80 percent control of mines, Bimco, linked to the steel mill.
The mines are estimated to hold about 500 million tonnes of good grade iron ore.
Zimbabwe — which now controls about 46 percent in the steel giant — had exempted Essar from complying with the local indigenisation rule after diversified Indian group sweetened the deal for reviving Zisco that had been shut since 2008.
The southern African nation’s Indigenisation and Economic Empowerment Act restricts foreign companies from owning more than 49 per cent in a local company or asset.
Revival of operations at NewZim Steel, which has about 3 000 employees on its payroll despite being dormant, stalled after the government refused to grant iron ore concessions to Essar for the resuscitation of operations at the iron and steel manufacturing company.
Now the new government has made a commitment to resolve the issues around the iron and steel producer’s access to the iron ore claims at Buchwa and Bimco.
“The deal has taken long because it is a huge project hence there were a lot of issues to be dealt with. However, it’s now coming to fruition,” said Bimha.
The Industry minister noted that Lancashire Steel will soon be coming into action as evidence of government’s commitment to revive industry.
Firdhose Coovadia, Essar’s resident director for Africa, Middle East and Turkey, said last year that Essar was prepared to “invest $1 billion in a steel plant in Zimbabwe to achieve annual production of 1,2 million tonnes.”
It would also sink $100 million on iron ore reserves that have not previously been explored and another $3 billion to create a world-class beneficiation plant and a separate power plant.
Zimbabwe miners are reeling under crippling power outages and challenges emanating from the operating framework such as expensive capital and high mineral royalties.