Creditors swarm Zisco in bid to recover money

They are agitated by the slow pace in addressing issues reportedly affecting the company operations.

Industry and Commerce Minister Welshman Ncube said Essar, an Indian firm that went into partnership with the Government to form NewZim Steel could not offset the debts in the absence of full implementation of the agreement by the two.

He said the Government, through Cabinet, has agreed to have 20 claims of iron ore in Mwenezi transferred to Essar as part of fulfilling its obligation.

Minister Ncube was giving oral evidence before a Parliamentary Portfolio Committee chaired by Buhera North MP, Cde William Mutomba (Zanu-PF).

Two German and China firms, he said, are major creditors that are increasingly becoming restless on the delay in addressing issues at the mine.

“We have written letters to them introducing them to Essar and one of them had reached an agreement. I know that the Germans are also now concerned with the delay, I know for instance that the new German ambassador is seeking to have a meeting with me to get an explanation of what is going on,” he said.

The Minister said the Chinese firm, Sinosure, which they also owe money has been problematic as it has refused to work with Essar, saying they were not owed anything by the Indian firm.

“They have said no, this is your debt pay us, get the money from Essar and pay us, but Essar is prepared to pay the debt in whichever way convenient to them,” he said.

There were also other local liabilities, including what Government should be paid by Essar for the stake it bought. All those will be paid simultaneously with conclusion of full implementation of the obligations.

On mining rights, Minister Ncube said Cabinet had directed that 20 claims be transferred to Essar, pending a determination by the Supreme Court on the remaining claims which Mr Rodrick Mumbire is saying are his.

Mr Mumbire, said Minister Ncube, was a former Buchwa Mine Company worker who took advantage of inside information and bought the mining right Special Grant that had expired.

This, in their view, amounted to corruption and Mr Mumbire had no legitimate rights to the claims he is claiming. On what was stalling progress, Minister Ncube said the Ministry of Mines and Mining Development had written them a letter in March this year saying they wanted to make a geological evaluation of the iron ore at Mwenezi, adding that the area was not subject of transfer to Essar.

This is despite the fact that BIMCO and Zisco, had applied for renewal of the Special Grant and had paid for all necessary fees.

“Implying therefore that the Ministry was not prepared to transfer mining rights of Mwenezi to Essar, implying also that they were not prepared to renew that Special Grant at the very least. Clearly Essar was not happy with this and we were also not happy with that,” he said.

Minister Ncube said the use of iron ore at Mwenezi was crucial because it had high grade ore that was not only good in value but will not damage the blast furnaces.

The Mwenezi iron ore had the minimum threshold of 64 percent while iron ore at Redcliff was around 54 percent hence the need to blend it with that from Mwenezi.

He said one reason for the constant breakdown of Blast Furnace Number Four was the use of low iron ore grade.

“We then immediately called for dialogue. That was the dialogue that saw the President intervening, the Prime Minister intervening, culminating with a meeting with my colleague in the Ministry of Mines and owners of Essar,” he said.

Turning to the suspension of salaries by Essar, he said the Indian firm had started paying salaries voluntarily out of good faith and had forked out $32 million.

He said Essar felt that the Government was not being sincere resulting in it suspending the salaries. The committee also expressed concern at the lack of proper evaluation of iron ore before the deal was signed.

But Minister Mpofu said the problem lied with the law, which did not provide for payment of any value before one assumes ownership of a claim.

He said it will be unprecedented to try to apply that principle on Essar as other minerals like diamonds in Chiadzwa and platinum have never been an issue in determining what an investor should pay.