FULL-SCALE operations at New Zim Steel, formerly Ziscosteel, are expected to commence before the end of the year amid revelations the government and the Indian investor are putting final touches to the implementation of a plan to resuscitate operations at the sleeping steel giant, a Cabinet minister said yesterday.
The government and Essar Africa Holdings have for the past few years been involved in protracted negotiations to reopen the Kwekwe-based former steel giant, but the talks have been hampered by the intricacies of structuring the whole deal, among them the takeover by the investor of a huge debt.
Addressing captains of industry and commerce at a Chronicle breakfast business meeting in Bulawayo yesterday, the Industry and Commerce minister Mike Bimha said the long-awaited deal would come to fruition very soon, adding that he was set to meet with Essar officials to finalise the $750 million deal in the next few weeks.
“There have been delays to the operationalisation of New Zim Steel but there is direction. In the next few weeks we will be seeing something happening at Zisco,” Bimha said.
“I will be meeting officials from Essar to put final touches to the implementation of the plan and ensure that things are being speeded up.
The revival of Zisco and NRZ will certainly result in the rise of Bulawayo.”
Bimha told delegates that the deal with Essar to revive Zisco had taken too long to conclude because of the huge debt saddling the firm and that the investors were required to assume all the debts owed by the former steel giant.
“Zisco has got huge debt and the government wanted a partner who could inherit the debt also and doing that alone, it takes time,” he added.
Essar, the African unit of Essar Group in November 2011 agreed to buy 54% in Ziscosteel in a deal worth $750 million, with the government keeping 36% and 10% to be owned by minority investors.
But the reopening of the steelmaker, renamed New Zim Steel, was held up by squabbles between the partners over ownership of mineral claims, which the government eventually agreed to transfer 80%of the rights to Essar while keeping the remainder.
On May 9, at a joint press conference, Essar and the government said they had resolved differences over mineral rights that stalled the project for nearly four years, and that the Indian firm would build a new 500 000 tonne steel plant at New Zim Steel for $650 million in two years.