May 9 (Bloomberg) -- Essar Steel Ltd.’s Zimbabwe unit will produce an annual 500,000 metric tons of the metal when it finishes the $650 million first phase of the refurbishment of a plant in the nation within two years, Industry Minister Joey Bimha said.
Essar bought state-owned Zisco, since renamed NewZim Steel, in 2010, but disagreements within the government over mineral rights owned by the unit prevented it starting up operations.
“Whilst revival plans are being undertaken by the government of Zimbabwe, Essar have also agreed to implement immediate interim measures that would inject funding into NewZim Steel and offer relief to workers,” Bimha told reporters today in the capital, Harare. The second-phase will see production rise to 1.2 million tons a year, the minister said.
Essar will pay $187 million of debt owned by Redcliff-based NewZim to Germany’s KfW development bank, said Firdhose Coovadia, Essar director for capital. A further $204 million will be paid to local creditors and $59 million to China’s Sino Sure Ltd.
The company also plans a 600-megawatt power plant, with half of its output going to NewZim and the rest sold to Zimbabwe power utility Zesa Holdings Ltd., Coovadia said. Essar got a license from the regulator to produce and transmit the power.
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