adminSenior Business Reporter
A DIVISION of the Redcliff-based steel producer, Steelmakers Zimbabwe has applied for $155 million offshore funding to increase its sponge iron production.
At present, the company, which has a sponge iron division in Masvingo, is producing 30,000 tonnes and if the required funding is secured, production will increase to 300,000 tonnes.
Sponge iron, sometimes known as direct-reduced iron, is produced using iron ore.
The product is one of the most important and basic raw materials required for the production of various steel or iron based products.
Steelmakers general manager Alexander Johnson told Business Chronicle they had been applying for credit lines since 2014.
“We’re still seeking offshore credit facilities and nothing has happened. We applied for funding from financiers outside the country and we’re still hoping that we’ll get the money that we’re looking for to increase our sponge iron production,” he said.
Johnson said the expansion project was scheduled to begin early this year but stalled due to lack of funding.
“We still have the expansion project in mind and we’re also looking at equity partnerships as a means of ensuring that the required funds are raised,” he said.
If implemented, the project would result in the completion of the unfinished three phases of Masvingo’s sponge iron project initial plan.
Under the first phase, the plant produces 54,000 tonnes of sponge iron per annum and on completion of the second phase output is expected to increase to 108,000 tonnes per year before increasing to 300,000 tonnes in the third phase.
The project was commissioned in December 2004 for the purposes of supporting the steel plant at Redcliff.
The objective was to use raw sponge iron as a substitute for scrap metal, which was in short supply.
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