Govt secures $1bn for Zisco revival
August 29, 2017
Tendai Mugabe Senior Reporter
Government has secured $1 billion investment for the revival of steel giant, the Zimbabwe Iron and Steel Company (Ziscosteel), from a Chinese company, in a deal that will result in one million tonnes of steel being produced in the next 18 months. It is projected that the investment might rise to $2 billion upon completion of all the implementation stages.
The Chinese investor is R and F Company, which is also involved in various investments ranging from mining to real estate and tourism.
R and F’s subsidiary based in Hong Kong expressed interest in Ziscosteel, and Industry and Commerce Minister Dr Mike Bimha last month signed the implementation framework with the company in China.
Yesterday, R and F president Mr Jang Li paid a courtesy call on President Mugabe at State House in Harare as part of expressing confidence in the deal.
Speaking to journalists after the meeting, Dr Bimha said the new deal had full Government support.
“We are looking at ultimately, when all these phases have been completed, we are looking at an initial injection of over US$1 billion and probably it will come to US$2 billion as we proceed,” he said.
“It’s not a small project. Much of what is there at Zisco won’t be used and their engineers have proved that probably it is about 15 to 20 percent of what is there that they will be able to use. Much of it is no longer in a state to be used, so they are also going to bring in equipment and technology that will see this project starting.
“They are already working, but this is really in stages. There is lot of technical work to be done. There are number of engineers coming in different groups to look at the plant, but we believe that in the next 18 months we will be able to see the production of a million tonnes of steel.”
Minister Bimha said R and F was not just interested in the rehabilitation of Zisco, but also expanding steel processing in the country, including production of stainless steel products.
Said Dr Bimha: “We have already agreed with them on their framework of the operation and they have had teams coming here for the past six months, engineers coming to do due diligence.
“We have had our team negotiating with them in China and also here. Our negotiating team was led by the chairman of Zisco Mr Nyasha Makuvise and a number of officials from various ministries. A month ago, I went to Guangzhou to represent Government in signing the agreement.
“What we were now doing is to look at how best to implement this project and today’s visit was more of the president of R and F to pay a courtesy call on the President. There is a lot of work to be done in ensuring that we finalise on the implementation matrix.
“There is also a lot of work to be done in terms of getting a number of ministries and Government departments to make their contributions in making sure that this project becomes a success.”
Dr Bimha said they had a meeting with Mines and Mining Development Minister Walter Chidhakwa who assured the Chinese investors of the availability of all the resources they would require.
He said another meeting was also held with Finance Minister Patrick Chinamasa and Reserve Bank of Zimbabwe Governor Dr John Mangudya.
Dr Bimha said the deal was structured in a way that would ensure that the Chinese investors concentrated more on steel production.
“It’s configured in a way that we would want the investors to focus more on steel making and we will hive off some of the subsidiaries of Zisco, which will allow other players to participate,” he said.
“You have subsidiaries like Lancashire Steel, the coke ovens and a number of similar subsidiaries, these will be hived off so that the new company will concentrate more on steel making.”
Dr Bimha allayed fears that the new project might fail to materialise the same way the Essar deal did.
“One of the reasons why the Essar deal did not come to fruition, I think the time that it was consummated was not the right environment,” he said. “That time when we had an inclusive Government.
“This time around its different, the entire Government is supportive of this project and that is the reason for us to come here. The President is fully behind this project. Therefore, I think in terms of commitment, I think there is 100 percent from Government to make it a success.
“Also on the time when we felt Essar would come on board, they made reference to the depressed market for iron and steel products and they felt it was not the time for them to invest. They felt that because of the prices that were down they were not in a position to go around and borrow money.
“Now, this is not a problem as far as this investor is concerned. He did not express any problem with issue of prices, the market of funding, so we are confident that the investor is willing and able to get into this project and also the Government is supportive.”
The Indian firm, Essar, pulled out of the Ziscosteel deal after commitment in 2011.
The deal, worth an estimated $750 million, was stalled by numuorus squabbles, including over mineral rights, and other technicalities.
The then Minister of Industry and Commerce in the inlcusive Government Professor Welshman Ncube was also accused of bungling of the Essar deal.
Source: The Herald