Essar, Zisco deal sealed

transaction.
Essar is in the process of acquiring a 60 percent stake in the former steelmaking giant, which stopped operations in 2008 due to financial constraints.
It will also acquire 80 percent of iron ore mining unit Bimco.

Agreements for the sale of Zisco to Essar were signed in March this year amid high expectations.
This marked the start of the revival process for the firm.
But the process was stalled after concerns were raised that iron ore mining claims would exclusively fall into the hands of the Indian firm.

But Essar had claimed the delays were the result of complex paperwork needed to transfer ownership rights.
Essar said there was much paperwork to be sorted, beginning from pre-independent Zimbabwe, when Zisco was known as Rhodesia Iron and Steel Company.
Industry and Commerce Minister Welshman Ncube said the latest development would result in agreed transfer of assets and liabilities to Essar.

“The implementation plan, which has been endorsed and adopted by Cabinet will result in the transfer of agreed assets and liabilities from Zisco and Bimco to the two companies inaugurated to undertake the project,” he said.
Essar formed NewZim Steel Limited and NewZim Minerals Limited to take over Zisco and Bimco respectively after agreeing to acquire Ziscosteel.

Bimco held the rights to iron ore claims for feedstock into Zisco operations.
Minister Ncube said the agreement for the implementation of the transaction marked yet another important milestone in the quest to revive Zisco.
“The implementation of the agreements is a result of much patience, hard work and the collective effort of the concerned ministries in the inclusive Government.

“And it sets a welcome precedent for significant future foreign direct investment in Zimbabwe, in particular, it will bring hope to the employees of Zisco, the communities of Redcliff, Kwekwe, Chivhu and Zimbabwe,” he said.

He added that by endorsing the implementation plan, Government had shown firm commitment in ensuring the parties complied with their obligations.
All hopes for the deal that ushered a ray of hope for Zisco workers tormented by poverty since the closure of the firm had seemed to be fading.
This allegedly caused fears that transferring the 80 percent stake into the ownership of Essar would create a monopoly over iron ore.

The fear stems from problems encountered in other minerals such as chrome and platinum, which are in the hands of a few companies.
Apparently, it was feared the country would face challenges in future if it wanted to involve more players in steel-making due to the monopoly on iron ore reserves.

It was also felt claims to be sold to Essar exceeded requirements for Zisco’s operations.
Bimco held most of the known iron ore deposits in the country.

Essar has pledged to restore Zisco to its installed steel production capacity of 1,2 million tonnes per year within 18 months of assuming ownership.
The company says the revival of Zisco to its previous glory would cost around US$750 million, including clearing local and foreign debts.

This will restore employment for about 3 700 Zisco and Bimco workers.