New ZimSteel opening soon: Minister

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IN a development that may bring back life to the town of Redcliff and many closed companies in the country, New ZimSteel, formerly ZISCO Steel, is set to open its doors soon after lying idle for the past eight years.
In an interview with The Patriot, the Deputy Minister of Industry and Commerce, Chiratidzo Mabuwa, said the Essar-Zisco Steel deal will be wrapped up soon as the parties involved tie the loose ends delaying implementation of the US$750 million transaction.
Mabuwa blamed the delay in commencement of operations at New ZimSteel on politicking during the Government of National Unity (GNU).
“There were three active parties involved in the deal and these were never in unison,” said Mabuwa.
“They would quarrel on almost everything, including basic things like in whose office the meeting would be held or who will go to the airport to receive the investor.
“Yes that is how bad it was.”
Mabuwa, however, said after the Inclusive Government, transactions have moved at a faster pace as most conditions of the deal have been fulfilled.
Part of the conditions of the deal required the new investor to settle a debt amounting to US$300 million and US$200 million owed to foreign and local creditors respectively.
Essar was to pay ZISCO Steel workers’ outstanding salaries, rehabilitate the pension fund which is in arrears to the tune of US$110 million, as well as the medical aid commitments which had accrued to US$35 million after the plant closed in 2008.
Another condition includes granting the investor access to water, electricity and coal.
“Government and Essar have fulfilled most conditions to enable the commencement of operations,” said Mabuwa.
“The original Share and Asset Purchase Agreement (SAPA) had conditions that required both parties to the agreement to fulfill first before finalisation of the agreement.
“Fulfillment of these conditions took a long time to realise and hence there was a delay in the finalisation of the transaction.
“To date, most conditions have been fulfilled by both parties.”
Minister Mabuwa said the Legal teams from Government and Essar were finalising the SAPA.
She refuted claims that there is nothing happening on the ground citing that the transaction never ceased.
“The SAPA is currently being cleaned up for final closure by legal Counsel from both parties to capture the adjusted plans as per the bid document to encompass additional costs associated with time lapse since 2011 when the original document was signed,” Mabuwa said.
“While adjustments to the agreement are taking place, Government and Essar agreed to implement immediate interim measures that would inject funding into New ZimSteel and offer relief to workers.”
In May last year Essar channelled US$400 000 for relief to workers, US$300 000 was towards employee’s children’s school fees while US$100 000 was channelled to medical aid.
Last month Essar agreed to inject money into Lancashire Steel, a subsidiary of New ZimSteel for the importation of feed stock.
Furthermore Essar has engaged Chinese and Indian engineering procurement and construction contractors to commence work on the ground based on the adjusted revival plan.
Mabuwa could not be drawn to disclose the exact day when the steel giant will be opened.
She said Government has chosen to remain mum because they did not want to scare away the investor.
“Investors are very sensitive with their money and if you talk too much you risk scaring them away,” she said.
“I do not want to say exactly when New ZimSteel will open, but it’s soon.”
However, an Indian investor based in Redcliff from Steel Makers Limited Group, general manager Alexander Johnson revealed to The Patriot that the Essar Africa Holding team will be in the country this Sunday to finalise on the New ZimSteel deal.
He expressed confidence that the steel gaint would be operational soon.
“This time around I got it from the horse’s mouth (Essar) that New ZimSteel is opening soon,” said Johnson.
“The Essar team will be in the country on February 15 to finally implement the revival of New ZimSteel.
“This time around, it is not a false start; it is going to happen.”
Johnson revealed that a committee headed by Vice-President Emmerson Mnangagwa was set up to spearhead the implementation of the revival of New ZimSteel.
“Decisions are no longer made at Ministerial level, but in the highest offices,” said Johnson.
“With that level of intervention, surely things will happen now.”
Before, the implementation of the revival of ZISCO Steel was in the hands of Ministries of Industry and Commerce, Finance and Economic Development and Mines and Mining Development.
Last month, Vice-President Mnangagwa was quoted in The Chronicle saying New ZimSteel was ready to resume operations after the Essar deal finally came to fruition.
“We toured ZISCO Steel on our way here,” he said.
“We want to see to it that the company begins operations as soon as possible.
“Essar can now begin production since there are no longer obstacles in the way.
“Very soon production will resume at ZISCO Steel and this will go a long way in reviving the economy.”
Under the plan, Essar will repair and refurbish key technology units such as the coke oven, the sinter plant, the steel-making plant, rolling mills and lime plant as well as install a new blast furnace.
A new captive plant and oxygen plant would also be installed.
The iron ore reserves at Mwanesi are believed to be about 33 billion tonnes while the beneficiation complex at the site would have an installed capacity to produce 75mt a year of high grade iron ore concentrate for pellet-making and sintering.
The iron ore beneficiation project will require 12-18 months for exploration and development, followed by a bankable feasibility study.
Under the revival plan, the first phase, which is expected to be complete within 18 months, will see capacity rising to 500 000 tonnes of steel per annum.
It is also hoped that steel production will be increased to 1, 2 million tonnes per year in the second phase and to 14 million tonnes in the long- term.
The resuscitation of the defunct ZISCO Steel will spur the revival of National Railways of Zimbabwe (NRZ) and many other ailing and closed companies in the country.
But for the 3 000 workers who wake up every morning and walk to the New ZimSteel crumbling complex to do absolutely nothing, they hope ‘soon’ is not another false start.

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