India’s Essar Group took control of the Zimbabwe Iron and Steel Co. in a deal that will see the Zisco mill refurbished, said Welshman Ncube, the southern African nation’s Industry Minister.
“In broad terms, the agreement provides for Essar to take over and release the Zimbabwean government from its debt obligations,” Ncube said in Harare, the capital, today. “Essar will also complete all work relating to the re-lining of the blast furnaces and coke oven batteries,” he said. Essar, through its Essar Africa Holdings Ltd. unit, will invest $750 million in the first phase of the project, Ncube added.
Zisco, which was state controled, hasn’t operated since 2004 when it closed due to mounting debts and ageing equipment. Essar will have a 54 percent stake in the company, Ncube said.
Essar Africa’s Vice Chairman Ravi Ruia said his company would have to first put in place “coal, uninterrupted electricity supplies, transport and logistics” in order to re-open the steel mill.
Zimbabwe President Robert Mugabe blocked the sale of Zisco to ArcelorMittal in June last year, saying the company was “too big” for the country.
Essar, which won a subsequent bid for Zisco, plans to produce steel within 12 to 15 months from now, Ruia said.
In a second phase, Essar will rehabilitate the rail link between Redcliff-based Zisco and the Hwange Colliery Co. in western Zimbabwe. Hwange is Zimbabwe’s biggest digger of coal, which is needed to fire furnaces at Zisco’s plant.
Essar will be the steelmaker’s biggest shareholder, with government holding a minority 35 percent and the balance held by other shareholders, Ncube said.
“Zisco is totally insolvent, with debts in excess of $340 million. It has no value as a company and its debts exceed its assets,” Ncube said, adding that most bidders valued the company at about $45 million during the due diligence process.