ZIMBABWE Alloys (ZimAlloys), one of the country’s biggest ferrochrome producers, is searching for potential investors to inject fresh capital into the business.
The firm requires at least US$150 million to upgrade its smelting facilities.
Ferrochrome, made from smelting chrome ore, is used in the production of stainless steel.
ZimAlloys controls almost 40 percent of the country’s chrome reserves, the biggest in the world after South Africa.
The company has potential of unclocking about US$225 million in the next five years through raw chrome exports.
“Tenders are hereby invited from interested parties to invest in Zimbabwe Alloys Limited,” reads a notice by the judicial manager Regis Saruchera of Grant Thorton on Friday.
“This invitation is not a prospectus and does not constitute or form part of any solicitation or invitation or any offer to the public to purchase the company or to subscribe to any ordinary shares in ZAL.”
ZimAlloys was owned by Anglo American Plc until 2006, when it was sold to the Farai Rwodzi-led Benscore consortium for an equivalent of US$10 million.
Its operations were closed in 2008 due to lack of working capital and falling global prices of ferrochrome.
In 2013, the firm was placed under financial judicial management due to poor performance attributed to closure of its four furnaces, poor global metal prices and escalating prices.
At the time it was placed under administration, the group’s net asset position stood at US$71 million while net current liabilities were at US$36,7 million.
It owes US$20 million to its biggest creditor Interfin Bank, which is also under curatorship and in which Rwodzi is also a major shareholder.
The firm has not engaged in mainstream mining and is only processing chrome from its dumps which were estimated at four million tonnes in 2015.
In June last year, Government ordered that both the firms surrender half of their claims for distribution to new investors.
ZimAlloys and Sinosteel’s ZIMASCO controlled about 80 percent of Zimbabwe’s chrome ore claims.
According to Mines Permanent Secretary Francis Gudyanga, ZIMASCO held 2 530 claims covering 68 655 hectares, while ZimAlloys held 1 052 claims covering 39 175 hectares.
The Chinese-owned ZIMASCO has since ceded half its mining claims to Government.
ZimAlloys is yet to comply with the directive and analysts say how the firm deals with the matter will be key to attracting any potential investor.
Mines Minister Walter Chidhakwa last week said Government was pressing ahead with its plans to repossess up to 40 000 hectares of chrome-rich idle ground from the sector.
ZimAlloys says it has plans to develop the concessions.
A separate Government document dated January 22 2016 shows that ZimAlloys made an offer to cede 13 percent of its land.
The offer was rejected.
Government is of the opinion that ZimAlloys would take a very long time to fully utilise the 50 percent that they would remain with at the rate at which they are exploiting the resource.
ZimAlloys had earlier indicated it could release blocks measuring 5 285 hectares to Government and wanted to be allowed to retain the claims targeted for use in future ferrochrome production as indicated in its 50-year mine plan.
It also proposed that Government should compensate it for the ground released.
This, the company reasoned, was for capital compensation for developmental work and other commitments made anticipating recoupment through future production and trade; compensation for claims with immovable equipment particularly designed for underground mining; mining rights which formed part of the equity price on the sale of ZimAlloys by Anglo to indigenous shareholders; and use of the precedence set on similar transactions for platinum claims held by foreign-owned companies.
ZimAlloys argued the resource measure from its competent persons report indicated ‘a largely depleted lumpy surface resource of 2,5 million tonnes out of a combined lumpy resource of 42,3 million tonnes’.