South African firm, Portnex International and its partners have to date invested $14 million into Zimasco. Portnex International currently operates three of Zimasco’s furnaces under a five-year lease agreement valued at $12 million. Through the investment, Portnex has paid Zimasco rentals in excess of $1,6 million but has expressed interest in acquiring the company, which is currently under provisional judicial management.
The ferrochrome miner, a unit of China’s Sinosteel Corporation, was placed under provisional judicial management in July this year after its indebtedness to banks and creditors increased to about $65 million in 2015 from $38 million in 2009.
Resultantly the miner stopped operations last year leading to the switching off of its furnaces at the Kwekwe refinery. Three of its furnaces were then leased to Portnex in a $12 million lease agreement signed last year.
However, at the creditors meeting held recently, judicial manager Reggies Saruchera said Portnex had been delaying in paying their rentals and this is turn had seen the company fail to pay its employees on time.
Portnex legal representative in the country Vengai Madzima of Titan Law Chambers told The Herald Business that Portnex has paid Zimasco in excess of $1,6 million and would have hoped that the employees would have been paid through the remitted funds.
Mr Madzima also said Portnex was not aware of Zimasco’s intention to file for judicial management the day after the South African firm signed the lease agreement for the three furnaces.
He said the circumstance that followed created a burden for Portnex’s financial facilities as the contract was with a less than financially robust counterpart. “Subsequently the payment cycle for Portnex has been affected and at their admittance in many cases payment has been late, but has consistently paid.
“To date we appreciate the support that we have been getting from Government since we started operating in Zimbabwe,” said Mr Madzima adding its imperative for the country to ensure that foreign investors are given the room to operate in a friendly and conducive environment.
Mr Madzima said that while Portnex is interested in acquiring Zimasco it had encouraged its judicial manager to allow more chrome ore to be purchased from the miners’ tributors as well as offering further value added services which is “a situation which could benefit the judicial management process and creditors alike.” At the company’s creditors meeting Mr Saruchera confirmed the interest from Portnex but added that no concrete offer had been tabled to date.