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Minister Mike Bimha

Martin Kadzere Senior Business Reporter

GOVERNMENT is contemplating disposing of its entire shareholding in the Zimbabwe Iron and Steel Company as part of renewed efforts to revive the company.Zisco, the state owned integrated steel firm stopped operations eight years ago after running into serious financial problems.

Efforts to revive the company, which used to be one of country’s biggest employer and a major economic force, failed after the deal with Essar Africa, which had committed to inject $750 million into the company encountered problems mainly due to huge debts and differences over mineral claims.

The Government had agreed to sell 54 percent of its shareholding in Zisco and 80 percent of its equity in BIMCO, which holds the iron ore mineral rights, to Essar Africa.

The collapse of the deal with Essar become the second major deal involving Zisco to run problems after another $400 million deal with Global Steel Holdings, also from India, failed under unclear circumstances in 2006. Zisco debts are estimated at $750 million.

Some of the salient points contained in the invitation of expression of interest for investing in Zisco says the investor willing to invest in the company should buy the entire shareholding.

The legacy debts will be taken over by the Government and the incoming investor will not be affected by the legacy issues.

“The Government is looking at a minimum investment of about $300 million and the disposal will also include some of the concession held owned by Zisco,” said one source familiar with the developments at the company.

The Government has since tasked the Engineering Iron and Steel Association the stake to look for interested investors, association’s president Mr Austin Tigere said last Friday.

“I can confirm that the Government has approached us to help look for interested investors and that has been communicated to our members,” said Mr Tigere in an interview.

“He said a meeting between the association and the Ministry of Industry and Commerce was held last week where some of the salient features were clarified.

Zisco is among 30 state owned enterprise and parastatals the Government is targeting for restructuring.

The company used to directly employ more than 3 000 and supported downstream industries.

Zimbabwe is estimated to have one of the largest iron ore reserve in the world. Last week, Industry and Commerce Minister Mike Bimha said Government was looking at building a robust iron and steel industry by opening up the sector to local and foreign investors.

He said the sector, which had been dominated by Zisco had potential to grow the economy.

“We are now looking the sector from a different perspective,” said Minister Bimha.

“We had to rethink and we are now looking at it from a broader perspective. It is no longer about Zisco only but we would like grow the sector by opening it to local and foreign investors.

“We need to build a robust iron and steel industry and that is what we are working on.”

Minister Bimha said Zisco and other players in the iron and steel sector would now be part of the broader plan that the Government was working on to grow the sector.