Govt works on Zisco debt Bill

Minister Bimha

Minister Bimha

Martin Kadzere Senior Business Reporter
GOVERNMENT is now working on a Bill that will see it taking over the debt owed by the Zimbabwe Iron and Steel Company while negotiations with “other potential investors” have commenced, Industry and Commerce Minister Mike Bimha has said.

Zisco, the State-owned integrated steel firm stopped operations about 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 fell away mainly due to the bureaucracies around mining claims, huge debts and subdued global steel prices.

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 Africa become the second major deal involving Zisco that ran into problems after another $400 million deal with Global Steel Holdings, also from India, failed under unclear circumstances in 2006. Zisco debt is estimated at $380 million.

“To take over the debt, necessary legislation is needed and the Ministry of Finance has started working on that,” said Minister Bimha in an interview.

“But as a ministry, we are carrying out an evaluation (of the company) to determine what we have. We have also started engaging other possible investors so that when we finish what were are doing, we will have people to talk to.”

Minister Bimha said assuming the debt would leave Zisco with a clean balance sheet, which will make the company attractive to investors.

He said apart from foreign and local debts, Essar Africa failed to raise money to implement the project after steel prices took a slump on the international markets.

Steel prices declined nearly 40 percent in 2014 and hit a decade low of $37 a tonne in December last year compared to the record high of $190 a tonne in February 2011.

To avoid further accumulation of debts from unproductive workers, the Government terminated contracts for Zisco employees on three months notice in December.

Finance and Economic Development Minister Patrick Chinamasa said the resuscitation of operations at Zisco will have upstream and downstream benefits to the economy, hence, the need for Government to secure an investor as soon as possible.

“Central to this will be the need to free the Zisco balance sheet of historical ‘baggage liabilities’, including an accumulation of new obligations with regards to wages that arise on account of workers that are not producing anything, and are actually sitting at home or pursuing other engagements,” said Minister Chinamasa in the 2016 Budget.

He said the Zisco issue should be finalised as “we have lost much time on this matter”.

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  • nyuchazi

    True there is need to engage new investors here. Essar deal collapsed, however we should have learnt something from this deal and I hope this time around we are going to correct our mistakes and ensure that we do it right.

  • the 1st Hokage

    This is okay. As long as you get rid of the inept management that was responsible for getting us there in the first place. It’s high time we got our act together.

    • Collin Mackenzie

      Nothing is okay they talk bull these people.
      We really don’t need an investor everything is there, proper management is what is need I can run and back Zisco stuip maaaan.

  • Zingizi

    Talking and talking all the time, implementing same strategies all the time and expecting a different set of results. This is called failure gentleman, Zisco is not going to come back anytime from now, despite the decaying infrastructure. If you look at Guinea, the Simandou Iron Ore project has not been developed for the past 20 years, despite having 2 billion tonnes of Iron Ore in situ. This is because of the price issues and one does not have to be an Alchemist to see that Zisco is doomed.

    • Collin Mackenzie

      I agree talk talk
      # talk talk

  • Collin Mackenzie

    Always working on something that’s
    AmaZim Zim for you.
    One will never hear that we have started or the project is complete,it’s always talk talk.

    Zimbabwe is full of talk they must shut up man.
    Really the don’t need an investor everything is there,all they need is a proper management period.

    Herald please tell your ugly looking ministers to shut up please .
    Rather report on Other things please.

  • Collin Mackenzie

    I agree all talk talk
    I really wounder if they get to read people’s comments on this site?

  • Wilson Magaya

    Once we saddle the people with Debt we should make sure the deal to be entered will be to the benefit of the people. It maybe time to start thinking of scaling down ZISCO. Business are born, they grow and die. ZISCO has not been well for sometime. For the sake of its assets which are worth much more that it owes we can retire the debt and saddle the willing people of Zimbabwe but we have to build a Zimbabwean run, Zimbabwean owned Steel company that grows out of the best Zimbabwe can offer. We don’t need to go beyond our boarder for the right people with the right technology. I have met outstanding Zimbabweans who are working and advising some of the world’s leading steel plants. they have proposals of solutions that will simplify the current Steel industry. It is time to simplify and move with the times for the sake of our people. LETS ENGAGE ZIMBABWEANS, where-ever they are to build businesses around the next generation steel industry in Zimbabwe. NUika vanhu, Musha Matare” Lets get the brightest minds of Zimbabwe working for us…