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Ziscosteel revival imperative

Ziscosteel revival imperative Zisco's local debts have ballooned to over $200 million from $72 million in 2010

zisco steVictoria Ruzvidzo Business Focus —
Below I reproduce my arguments which hold true today as they did then:

When I visited India in 2011, I had the opportunity to meet up with senior executives from Essar Holdings, who expressed keen interest in the Ziscosteel deal and what they had in mind in terms of restoring it to its former glory.

By then discussions with the Government here had already started and pledges had been made to offset Zisco’s debt, which had weighed too heavily on the firm, resulting in its closure.

Furthermore, the senior executives said they were ready to re-employ all former Zisco workers, including those that had gone to the Diaspora. They sounded like it was only a matter of days or weeks before the critical Blast Furnace Number Four at Zisco would begin to fire again.

In fact an agreement under which Essar would acquire 54 percent of Zisco for US$750 million had already been sealed in 2010. But four years down the line, there seems to be more talk than action happening at Zisco, christened NewZimsteel after the deal.

The flicker of hope that had been re-ignited in the hearts and minds of the workers and management is fast fading as their patience wears thin. This is to be expected given the promise after promise that they have seen crumbling.

Of course the discussions or implementation has not been smooth as Government and the investor seek to negotiate on one issue or the other. One day workers wake up to assurances that everything is gonna be alright but their smile is fast turned into a grin as reports of more loose ends emerging, put a distance to the implementation plan.

Certainly deals of such magnitude need careful handling and often take a bit of time to implement but not this long by any standards When it was first announced, Zimbabwe celebrated that it would be the largest single investment to come this way, especially at a time when many had ruled this country out in terms of attracting solid investment.

Champagne bottles were popped and celebrations made but it was a case of putting the horse before the cart as developments would show. Things were not going to be as simple as originally expected.

Of course the Government needed to do a thorough due diligence to ensure it would not be compromised in any manner wile Essar understandably needed assurance that they would be guaranteed of a good return on investment, among other considerations.

But why has all this taken that long? A few years ago the Ministry of Mines and that of Industry and Commerce were fighting over which of the two ministries the deal should legitimately fall under and that took away quite some energy and momentum as the respective ministers at that time would fight in the media. Such confusion was never going to be productive.

That phase has since passed but there still remains a huge hold-up which can hardly been explained, at least to generality of the populace not privy to the discussions.

As a result, some of us are not even sure whether to celebrate or frown at what Minister of industry and Commerce Mike Bimha said about something happening at shareholder level which is still to be communicated to management.

He told Herald Business in a story published yesterday that Government had done its part in addressing the sticking points that had slowed implementation. But with this came the news that there is nothing much to rehabilitate at NewZimsteel but that new plants have to be erected, a process that will take at least 24 months.

Did he mean 24 months from yesterday or from some time in future when they finally agree on the way forward since he also revealed that the original plan had been abandoned. I am sure the good minister can understand the trepidation.

The fact that Essar consultants are in the country could be an indication that finally progress will be made although we are quickly reminded that teams from the group have been in and out of the country many times over, since 2010.

We hope this time around progress will begin to reflect on the ground. In the meantime we are made to understand that more than 2 000 workers remain stranded. Promises that had been made in terms of salary payments have not been honoured and they are not sure what tomorrow holds.

What is sad really is that these workers still report for duty, as a standing rule for re-engagement but they have very little to show for their efforts. Most are involved in sorting the scrap metal that the firm is exporting to offset some of its debts.

A visit by Herald Business last week revealed that most of the employees are near destitute as the meager allowances they get cannot meet basic requirements such as food and health needs.

But we hope that the giant will soon re-awaken and inject life into that part of Zimbabwe, originally known for its vibrancy and significant contribution to GDP.

WE hope, as Minister Bimha stated, and as revealed in May, that the stage is now set for a sustainable revival of NewZimsteel. It is a strategic plant that will play a key role in national economic recovery. Zimbabwe needs such projects to lubricate the economic engine.

The fact that most of the sticking points have now been ironed out should mean that the parties are ready to get down to real business. We understand that some aspects of the project are expected to resume in six months’ time.

We hope the shareholders will stick to the new plans and ensure that we will not spend a decade merely talking and reflecting on the deal’s potential.

The economy needs to see and experience what Essar has brought to the table and how this will transform fortunes at NewZimsteel. The success of this joint venture will have far-reaching implications in terms of other projects and investors who will take a cue from it.

On its part, Government needs to move with speed to ensure a conducive environment is created while for Essar, its experience as a global investor that has been in this kind of business for a long time should begin to show.

More action and less talk is what will bring tangible results which are so desperately needed in this economy. For the worker, it’s a bread and butter issue, for Government, its about restoring investor confidence while for Essar, its about showing off its stamina as a global giant. These factors at play should give impetus to the project.

In God I Trust!

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