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The US$750 million deal appeared to be on the rocks following reservations from the Ministry of Mines and Mining Development that Essar had acquired most of Zimbabwe’s iron ore mining rights, held by Buchwa Iron Ore Mining Company for a pittance.
According to Deputy Minister of Mines and Mining Developement Gift Chimanikire the rights, an estimated 32 billion tonnes of iron ore, would not be given away for a “bowl of soup”.
There were also concerns that sanctioning the deal in its original form would result in a monopoly in iron ore similar to one seen in platinum industry, which has created problems for Government.
Parties to the deal had principally agreed on the mega investment back in March 2011 which included the sale of Ziscosteel and iron ore mining concern Bimco, but to date the steel giant remains closed.
Senior officials from the Ministry of Mines and Mining Development earlier confirmed that they would not allow the transfer of all Bimco mining rights to Essar Global as that would create monopoly.
But Minister Ncube last week said it was only a matter of time before Government transferred the mining and prospecting rights over Ripple Creek and Mwanesi Range to the Indian steel giant.
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“As far as I know there are no sticking points because all the matters are covered by specific Cabinet resolutions, the mining claims; whether it is on the Ripple Creek or Buchwa – they agreed they have already written letters for the transfer of those.
“Whether it is for the prospecting licences to Mwanesi (Range), Cabinet directed that this be done and it is a question of sequencing, the Ministry of Mines and Mining Development has been saying that in the implementation process you need to have completed steps A, B, C before you actually get the prospecting licences,” said Minister Ncube.
He said that a Cabinet office constituted by the various ministries including Industry, Mines and Essar was leading a committee of senior officials tasked to ensure the required formalities were completed.
“We hope that very soon in the next few days or weeks we can actually conclude everything, but there are no sticking issues, it is bureaucratic, procedural issues that have to be complied with,” he said.
But it is understood questions had been asked how Essar could be given exclusive rights to most of Zimbabwe’s known deposits of iron ore held by Bimco.
Government relinquished its shares in both Ziscosteel and iron ore mining concern Bimco in which it would hold a mere 20 percent shareholding.
Concerns were further raised as it emerged that Essar planned to export some of the iron ore using a pipeline that it would build connecting Mwanesi in Chivhu and the Mozambican port of Beira.
As such, it was felt that Essar Global’s motivation to invest in Ziscosteel was not to revive the mothballed former steel making giant, but access to iron ore.
This, in some quarters, is thought to be the case considering that Ziscosteel, with installed capacity of only one million tonnes per annum, would be only, but a minute proportion of the Indian conglomerate’s global steelmaking operations, which churn out in excess of 14 million tonnes annually.
Online Reporter