Happiness Zengeni Business Editor
Industry and Commerce Minister Mike Bimha has said work towards restarting Ziscosteel is so far restricted to Government, as the shareholders, and Essar Africa, with nothing having been communicated to management.
Minister Bimha said this in response to reports made by Ziscosteel management in Parliament that the business is currently on its own as Government is still negotiating with Essar, surviving through selling sundry products such as blast furnace slag used to manufacture cement to South Africa and the local market.
Minister Bimha told The Herald Business that Government had done its part in terms of the sticking points that caused a delay in the restart. He admitted that the restart of Zisco had deviated from the original plan.
“I can understand what management is feeling like at the moment. Perhaps it could have been better if they had met the board but the truth is what is happening now has nothing to do with management as everything is still at a shareholder level.
In 2010, Essar agreed to buy 54 percent of Ziscosteel, now NewZim Steel, in a deal initially worth $750 million
Minister Bimha said the original plan had been delayed by Zimbabwe and Essar being a global company could not just have sat and waited for the deal to pull through.
“After we finally agreed to the deal, Essar engineers saw that they could not do things as originally planned.”
In the current state, 65 percent of the plant is now beyond repair or any upgrade and would require a completely new structure.
“Setting up a new plant should take about 24 months. It is no longer an issue of rehabilitation, but more of constructing new plants.
“That entails a lot of work in terms of planning and making orders of the new equipment and machinery.” Minister Bimha said other small activities will, however, be set up within six months.
Essar would get a renewal on the special grant at Buchwa while the Indian company has partnered with ZMDC on a joint exploration of Mwanesi ranch in Chivhu to ascertain the exact amount of iron ore deposits in the area.
He said that Essar consultants were in the country looking at coal supplies in the country. The group has started negotiations with holders of Hwange coal concessions with a view to establishing joint ventures to extract thermal and coking coal.
“So you can see that on the ground, yes, things are not happening but a lot is happening in the background. Government has done its part. We just need to enhance communication between the management, unions and ourselves.”
On the ballooning debt, Minister Bimha said the agreement is that Essar would assume what was owed to external creditors while Government will take over the domestic debt.
“Unfortunately, the Finance Ministry during the GNU did not honour this obligation and as such the figure has ballooned,” he said.
As of March 31 2014, Ziscosteel local arrears stood at $204 million, pushed upwards by interests and penalties. Of the $204 million, $110 million relates to employee related liabilities while the balance is the pension fund deficit. Overall total liabilities are over $360 million.