Govt hands over mining lease to Chinese steel giant Disco
Oliver Kazunga Senior Business Reporter
Government has given Chinese firm, Dinson Iron and Steel Company (Disco), which is developing the US$1,5 billion steel plant in Manhize near Mvuma, an iron ore mining lease with an open-ended tenure.
The mining lease entitles Disco, a unit of China’s biggest stainless steel producer, Tsingshan Holdings Group Limited, to 12 270 hectares on which the steel plant is being established.
Tsingshan operates two other local subsidiaries in Zimbabwe namely Dinson Colliery in Hwange, Matabeleland North Province and Afrochine Smelting (Pvt) Limited in Selous, Mashonaland West Province.
The project is touted as Africa’s largest integrated steel manufacturing plant.
Speaking during the handover ceremony in Harare yesterday, Mines and Mining Development Minister Winston Chitando commended the investor for going ahead with the setting up of the project, which is Africa’s largest integrated steel plant, even though the title deed had not been issued.
“I must recognise Dinson for supporting the Government in terms of its investment programmes but also for having faith in the Government.
“Many companies will say we don’t invest until we get our mining lease. But when Dinson got assurance from His Excellency (President Mnangagwa) that the mining lease will be coming, they did not wait for the title deed.
“They actually proceeded to start investing millions of US dollars without having the mining lease in their hands. We would like to acknowledge Dinson and thank them for their faith in the Government of Zimbabwe.
“What we are handing over today is a mining lease, which effectively is the title deed for Dinson Iron and Steel ownership of their 12 000ha in that area . . . we look forward to Dinson or the Tsingshan Group continuing to move at the fast pace which they are moving at,” he said.
Minister Chitando said the steel project was a typical example of a mining and comprehensive value-addition investment that is almost an ecosystem that dovetails with National Development Strategy 1 (NDS 1) that is hinged on driving the country towards an upper middle-income economy by 2030.
“If you look at the number of minerals that are involved, the value chain from coal up to coke, the value chain of iron ore, limestone, ferrochrome it’s really a typical example of a consolidated value addition programme which is in line with NDS 1 and, which is also in line with supporting the vision of His Excellency of a 2030 upper middle-income economy and also our US$12 billion target,” he said.
NDS 1 is the Government’s five-year economic blue-print running from 2021 to 2025 driving the country towards an upper middle-income economy society by 2030.
The economic development programme, which will be succeeded by NDS 2 is hinged on growing and stabilising the economy, among other fundamentals.
In 2019, the Government also launched a mining roadmap for a US$12 billion mining economy by the end of this year to be driven by the ongoing massive investment and expansion projects in the mining sector.
Prior to the launch of the mining industry growth target, the sector’s contribution stood at US$2,7 billion in 2018 and the figure has since registered phenomenal growth accounting for US$5,3 billion in 2021.
“More importantly, we look forward to Dinson moving to the next expansion stage after this current phase is done.
“We are certain that you are firming up the scale and plans of the expansion once this current phase is commissioned towards the end of this year,” he said.
Disco has indicated that their first blast furnace would be on stream by November this year.
When operating at full throttle, the steel plant will produce 1,2 million tonnes of carbon steel annually with the first phase churning out 600 000 tonnes per year for local and export markets.
The steel plant will see the development of a new town in Manhize while a number of infrastructural projects are also coming on board.
The Government has also approved a master plan for the development of a new town between Mvuma-Chivhu and Manhize amid growing interest from industrialists, banks, and other service providers to be part of the massive investment.
It is expected the new town will have a carrying capacity of 30 000 residents and would be a game changer for Zimbabwe.
Disco managing director Mr Benson Xu expressed gratitude to the Government saying the handover of the mining lease boosts their confidence in the steel project.
“We are grateful for the continuous support of the project and without the commitment from the Government nothing will happen, so we really appreciate the commitment from the Government,” he said.
In the past 12 months, Disco has completed the construction of the foundation of critical infrastructure such as blast furnaces and casting equipment and is now busy with the installations.
He said construction of the project was a bit delayed by the incessant rains that Zimbabwe experienced in the previous rainy season.
The Meteorological Services Department had predicted that Zimbabwe would receive normal to above-normal rains in the 2022/2023 rainy season.
“Now most of the equipment has come through already, so we were just a bit delayed because of the rainy season in terms of logistics and transport, but we keep receiving a lot of equipment that’s coming on the site.
“I think from now until the end of this year we are going to be very busy with installation and testing.
“We are hopeful that by the end of this year, we could be commissioning the blast furnaces, that’s our target and also the assignment which we promised to the President we must deliver no matter whatever the difficulties we have, but we need to deliver that target by the end of this year,” he said.
“The critical issue, which we are still working on, is the transmission line for power supply. My team is already in Zimbabwe and working with the ZETDC (Zimbabwe Electricity Transmission and Distribution Company) for the completion of the line and everything is in good progress at Manhize.
“We are still very confident that by the end of this year, we will be able to commission the steel plant.”
The steel plant would be powered by two 175MVA substations and a 330KV transmission line stretching 100 kilometres from Sherwood in Kwekwe.