Zisco seals deal today

Essar Group will be sealed this afternoon amid indications it could be one of the biggest foreign investments in post-independent Zimbabwe.
Last year, Government agreed to sell its 54 percent stake in Zisco in a bid to resuscitate the Redcliff-based iron and steelmaker.
While the financial details of the deal could not be immediately obtained, it has been widely speculated that Essar would pay close to US$500 million for the 54 percent stake.
Under the deal, Government will keep 36 percent in the company while private investors would own 10 percent.
Government has been burdened with financing loss-making Zisco’s operations.
The company’s failure to adapt to the unpredictable market and global decline in demand for steel products in the late 90s also affected its viability.
The decline in output was worsened by poor financial planning, administrative and management failure, structural bottlenecks, erratic supplies of critical inputs among them low staff morale and the absence of forward-looking strategy.
Zisco’s privatisation, the first under the inclusive Government, is excluded from the indigenisation
and empowerment law, which requires foreign-owned companies to own not more than a 49 percent stake in local firms.
Initially, South Africa’s Arcelor Mittal and Gateway Overseas Consortium, partnered by Indian steel-making giant Jindhal Steel and Power, had been tipped as potential investors.
But their bids were thrown out over concerns on their conglomerate nature. That was suggested strongly would not serve Zimbabwe’s national interests.
Once Africa’s biggest steelmaker, Zisco produced 700 000 tonnes of steel annually, earning the country millions through exports. The company is saddled with huge debts, to be taken over by new investors.
Zisco once entered into a 20-year management contract with another Indian firm, Global Steel Company, about four years ago.
That arrangement provided for a management contract involving investment by the Indian firm of US$400 million in Zisco in exchange for a 20-year concession to manage the company’s affairs under the Reserve Bank of Zimbabwe-sanctioned concept of “Rehabilitate, Operate and Transfer”.