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Essar had appeared apprehensive after Dutch bank ING demanded that they use proceeds due to Government to settle a US$28 million debt owed by TelOne. Industry and Commerce Minister Welshman Ncube yesterday confirmed that the negotiators had overcome the hurdle.

Herald Business understands that the almost two-week-long discussions sought to find common ground with either Essar Africa or ING.
Minister Ncube, however, said he could not give more details as he was yet to obtain a copy of the contract.

“Those who were negotiating have concluded and the negotiators have given the contract to the lawyers to look at the details to ensure that that it (contract) means what it is supposed to mean,” said the minister.
Government guaranteed the loan agreement entered between the State-owned fixed telecommunications operator and ING some time in the 1980s.
Essar appeared to develop cold feet due to the fact that ING had already obtained a court order in Mauritius to attach Essar’s assets if it failed to pay   off the debt.

The Mauritian firm landed the right to buy a 54 percent stake in Ziscosteel after beating a host of other local and international suitors.
The Government was reluctant to accede to the demands of ING fearing the case could set a precedent that would give a wrong cue to other creditors.
It is against this background that discussions over the contract for the sale/purchase of Zisco-     steel hung in the balance as the parties to the deal haggled.

Essar and the Government had been locked in discussions for the past two weeks on the contract for the Ziscosteel deal and the TelOne debt appeared to be the major stumbling block.
Essar Africa beat contenders such as Jindhal Steel and Power of India, Arcelor Mittal of South Africa, Reclamation and Murray and Roberts (SA), Sino-Zimbabwe, the Gateway Consortium and Steel Makers Zimbabwe for the right to revive Zisco.

Similar efforts to resuscitate the firm failed in 2004 when a US$400 million deal with Global Steel Holdings of India collapsed under unclear circumstances.
As part of its desire to revive the Redcliff-based former steel giant Essar Africa had committed to pay off the State enterprise’s estimated US$240 million debt to Germany’s KFW Bank and an unnamed creditor from China.

Apart from settling the debt Essar will pay US$55 million Essar for the shareholding and about US$65 million on reviving blast furnaces and coke oven batteries.
Ziscosteel was a vital and strategic asset for Zimbabwe and has Essar pledged to use the firm                    to leverage development of the country and its people.

At full throttle, Zisco had capacity to produce between 700 tonnes and one million tonnes of steel and will benefit from the experience of Essar, which is planning to ramp up steel output to 14 million tonnes annually in future.-Herald Business