admin
Oliver Kazunga Senior Business Reporter
ECONOMIC commentators have hailed the finalisation of the $750 million Essar deal saying it heralds a new chapter in Zimbabwe’s economy as it will promote industrial recovery and growth in the country.Last week, government through the Ministry of Industry and Commerce announced that the Essar deal had been finalised, a development that will see the resumption of operations at the Redcliff-based steel manufacturing company, NewZim Steel, formerly Zisco.
The deal, under which Essar an Indian conglomerate acquired a 54 percent stake in the Redcliff steel producer was signed in November 2011, stalled due to challenges including delays in the handover of iron claims.
Part of the deal would also see the new investor acquiring 80 percent of NewZim Minerals, while the government would take the remaining shareholding.
Industry and Commerce Minister Mike Bimha said Essar officials have reaffirmed their commitment to the project and agreed to finalise the process.
This, he said, paves way for the operationalisation of NewZim Steel and its subsidiary NewZim Minerals with immediate effect.
In separate interviews yesterday, economic commentators hailed the conclusion of the Essar deal saying it was a step in the right direction as it brings relief to more than 3,000 workers who have gone for almost two years without salaries when the new investor suspended payment in March 2012.
They concurred that resumption of operations at Redcliff would promote economic revival.
“The conclusion of the Essar deal is a step in the right direction as the resumption of operations at the steel plant will see the country deriving a lot of economic benefits. First of all is that the finality of the deal has brought relief to more than 3,000 workers at NewZim Steel who had gone for almost two years without salaries,” said an economic commentator, Wendy Mpofu.
She said if NewZim Steel workers start receiving salaries it means they would be able to fend for their families as well as sending them to school.
“Redcliff which was fast becoming a ghost town will now be resuscitated as resources will now be available to resuscitate all the infrastructure in the town, which had become dormant due to closure of the company.
“For example, roads in Redcliff had become dilapidated and recreational facilities in the town were an eyesore and it is expected that as operations resume at the steel manufacturing plant the situation in that town will improve,” she said.
Mpofu added that the Redcliff Municipality which was struggling to run the town due to cash flow challenges would generate revenue from NewZim Steel operations.
Another economic commentator, Peter Mhaka, said the resumption of operations at NewZim Steel would see the country’s export sector emerging from the woods once the steel producer starts exporting.
He said export earnings from NewZim Steel would improve liquidity supply in the economy at a time when liquidity crunch was one of the major economic growth impediments.
“Conclusion of the Essar deal has a lot of benefits to the country. Unemployment figures are expected to go down as more and more people are expected to be employed as the Redcliff firm expands its operations.
“Also, communities in Chivhu where iron ore mining will be done would see people in those areas getting employed. As steel production demands raw materials such as coal, it means coal demand in the country will rise and this means that companies such as Hwange Colliery Company Limited and Makomo Resources will have their operations boosted,” he said.
Added Mhaka: “Other downstream industries such as those that use steel products are expected to enjoy economies of scale as a result of operations at NewZim Steel.”
According to a revival plan of the giant steelworks, the first phase, which is expected to be complete within 18 months, will see capacity rising to 500,000 tonnes of steel per annum.
It is also hoped that steel production will be increased to 1,2 million tonnes per year in the second phase and to 14 million tonnes going forward. NewZim Minerals is expected to work on exploring and developing an iron ore beneficiation project.
In addition, the iron ore from Chivhu will be blended with iron ore from Ripple Creek near Redcliff to improve the quality of feedstock to the steel plant.
Another economic commentator, Chipo Warikandwa added her voice saying resumption of operations at NewZim Steel was set to see the country moving towards a positive economic growth trajectory in line with the objectives of the Zimbabwe Agenda for Sustainable Socio-economic Transformation (Zim-Asset).
Zim-Asset is government’s new economic blueprint expected to anchor the country’s economy between now and 2018 based on four pillars.
At its peak, NewZim Steel employed more than 4,000 workers and was producing about 1 million tonnes of steel per annum.
The firm stopped operations in 2008 at the height of the economic crisis the country went through.
Online Reporter