adminThe representatives of Essar Holdings are expected in the country this week to renegotiate the shareholding structure of the new steel company with Mines and Mining Development Minister Dr Obert Mpofu and his Industry and Commerce counterpart, Professor Welshman Ncube.
According to Professor Ncube, this is a make-or-break meeting hence the interest it has generated among all the stakeholders.
President Mugabe commissioned the $750 million New Zim Steel (Pvt) Ltd last August and the company was expected to resume production in about 12 months’ time. Under the original deal Essar Holdings took a 60 percent controlling stake in NewZim Steel leaving the Government with 40 percent.
The Government also has a 20 percent stake in NewZim Minerals (Pvt) Ltd, formerly Buchwa Iron Mining Company (Bimco) while Essar Holdings has 80 percent. Essar Holdings, according to Minister Ncube, has since the commissioning paid more than $32 million in salary arrears to former Zisco employees who are still owed about $12 million.
The new investor, however, suspended payment of salaries last May to press Government to finalise the takeover agreement. Minister Mpofu has been pushing for the renegotiation of the Government-Essar deal arguing that the new investor could not pay a paltry $700 million for resources worth more than $30 billion. What is positive is that Essar Holdings have agreed to renegotiate the deal and all stakeholders are keeping their fingers crossed that the outcome of the negotiations will be positive. Stakeholders, especially workers, want production at NewZim Steel to resume as soon as possible.
The resumption of production at the new steel plant, as rightly observed by President Mugabe when he commissioned it, will breathe life back into surrounding communities of Redcliff, Kwekwe and Gweru.
The resumption of production will have direct impact on industry and big companies such Hwange Colliery Company Limited and National Railways of Zimbabwe are guaranteed business. What is comforting is that Essar Holdings, according to Professor Ncube, has reached an agreement with the Government over outstanding issues of mining claims. We have said it before that it is dangerous to change goalposts once we have signed agreements with investors. It is therefore incumbent upon the Government to be very thorough and avoid shortcuts as it negotiates terms with investors. The embarrassment of revisiting a concluded deal especially after the proposed project has been commissioned as what we are witnessing now with NewZim Steel should not be repeated.
Investors are very sensitive and it is such blunders that could see the country witnessing a flight of investors. We need to build that trust in our investors that whenever we engage them, we do so in good faith. It is our hope that the scheduled meeting between the two Government ministers and Essar Holdings representatives will pave the way for the resumption of production at NewZim Steel which is Redcliff town’s lifeline.
The new company has committed itself to retaining the defunct Zisco’s 3 500 workers and we are confident it will not be long before these workers are back at work.
derick.khumalo