Ferrochrome producer, Niachos Investments, owned by South Africa’s Portnex has received an offer from a Belgian customer willing to pay upfront for the commodity to enable it to restart production, corporate rescue manager Mr Claudious Nhemwa has said.
However, this offer is subject to Niachos securing a plant to lease and obtaining a favourable electricity tariff from the Zimbabwe Electricity Transmission and Distribution Company.
Niachos, which was operating the west plant of Zimasco in Kwekwe – leased by Portnex – closed down in December last year due low ferrochrome prices on the international market and high costs of production.
The company was placed under corporate rescue in terms of the Insolvency Act (Chapter 6:07) in February 2020.
The company, alongside other Midlands-based companies Zimasco, ZimAlloys, JinAn and small Chinese smelters are major producers of ferrochrome which is used to make stainless steel.
“We have an offer on the table from a big customer in Belgium and we have since engaged the Reserve Bank to see if we can retain 100 percent of the export proceeds for at least 12 months so that we can rescue the business,” Mr Nhemwa said.
Last month, Zimbabwe set the foreign currency retention threshold for all exporters at 70 percent to sustain the positive impact of the auction system in price stability.
The company has capacity to produce 5 000 tonnes of ferrochrome per month and generate between US$3,5 million and US$4 million if allowed to retain all its export proceeds.
It employs 250 workers and several hundreds in the down stream industries.
Mr Nhemwa said Niachos has also engaged Zesa Holdings for a special tariff during the implementation of rescue plan and currently hunting for smelting plant to lease.
The current lease agreement between Zimasco and Portnex expires in December this year.
“We believe all these initiatives will rescue the company,” said Mr Nhemwa.
A recent report by the Ministry of Industry and Commerce on the state of the industry during lockdown period, which started in March this year showed that only Zimasco and JinAn were operating, employing nearly 2900 people.
From the limited exploration, the known chrome ore resources occur approximately 60 percent as lumpy (which is ideal for smelting) and 40 percent as friable ores or fines.