admin
In August last year the Government concluded a $750 million agreement with Essar Global to take over operations at Zisco (now NewZim Steel).
Under the deal, Essar took a 60 percent controlling stake in NewZim Steel.
After the signing of the deal, NewZim Steel was expected to rekindle production within the next 12 months.
However, to date Government and Essar are yet to finalise the issue of mining rights, stalling progress at the Redcliff-based steel giant.
“It is unacceptable that we have gone this far without implementing the $750 million deal that Government and Essar concluded last year. Other potential investors are watching the challenges that Essar is facing before the company starts operations.
“The development will have negative effects on how Zimbabwe investment climate is perceived by potential foreign investors. It is imperative for Government to urgently conclude the deal,” said the Zimbabwe National Chamber of Commerce immediate past president, Mr Trust Chikohora.
He said the deal was one of the country’s biggest investment projects that had far reaching effects to the economy.
“When the deal was signed, we celebrated looking forward to seeing economic growth and development.
“The investment has far much reaching implications to our economy.
“Besides steel production, Essar have indicated plans to venture into electricity generation not only for the purposes of its core business, but some of the electricity will be fed into the national grid and this will address power challenges the country is facing.”
Mr Chikohora said a number of downstream industries stood to benefit as a result of resumption of production at NewZim Steel.
“The Essar deal has a massive stimulus to Zimbabwe’s economy. Once operations resume at NewZim Steel, companies such as Hwange Colliery Company and the National Railways of Zimbabwe are guaranteed of doing business with the steel firm and also other down stream industries will benefit,” he said.
Another economic commentator, Mr Bradwell Mhonderwa, called on the responsible authorities to expedite addressing the outstanding issues on NewZim Steel.
“Delays in concluding the outstanding issues facing NewZim Steel signify a gloomy picture in terms of the country’s investment climate.
“The delays do not auger well for the purposes of attracting foreign investment,” he said.
The Affirmative Action Group executive director, Dr Davison Gomo, however, said the country’s investment could not be defined by a single deal.
He said although the State needs to urgently resolve the outstanding issues surrounding Essar deal, prospective foreign investors would not be scared away from investing in the country.
“NewZim Steel is a strategic company to Zimbabwe’s economy. As a result the conclusion of outstanding issues by Government and the new investor should be done carefully guaranteeing that it is done in the best interest of the country.
“There are certain aspects that need to be reviewed, however, it is taken too long to conclude the deal,” he said.
“Government should ensure the deal comes into fruition in favour of the interests of the country.”
The steel firm has since suspended paying salaries for its more than 1 500 employees to press Government to finalise the takeover agreement.
Mines and Mining Development Minister Dr Obert Mpofu and his counterpart Industry and Commerce Minister Professor Welshman Ncube have traded accusations over delays in the resumption of operations almost a year after the deal was signed.
Industry and Commerce Parliamentary Portfolio Committee has summoned the two ministers to appear before it next week to explain the stalemate hindering Essar from commencing production.
However, the Ministry of Mines and Mining Development has indicated it would soon meet Essar Africa Holdings officials to deliberate on the impasse that has seen operations at NewZim Steel being stalled, our sister paper Sunday News, reported yesterday.
Online Reporter