Lancashire to resume operations

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INDUSTRY and Commerce minister Mike Bimha (pictured) has revealed that normal production at Lancashire Steel is expected to resume in the next six months after the injection of fresh capital by Essar Africa Holdings into New Zim Steel.

INDUSTRY and Commerce minister Mike Bimha has revealed that normal production at Lancashire Steel is expected to resume in the next six months after the injection of fresh capital by Essar Africa Holdings into New Zim Steel. Victoria Mtomba Business Reporter

Bimha last week told journalists in Harare that the new investors had agreed to revive the Kwekwe steel plant.

“It has been agreed to revive operations at Lancashire Steel using imported feedstock over the course of the next six months,” he said.

“In addition, it has also been agreed to import certain steel products for sale through some existing Zisco or New Zim Steel distribution centres.”

Meanwhile, Bimha said workers at the beleaguered company would start receiving their outstanding salaries this week. Ziscosteel chairman Nyasha Makuvise said the company was still working on the figures on how much would be given to the 2 800 employees.

“Relief will start from next week thereafter,” he said.

The employees are owed $204 million in outstanding salaries and $110 million relates to employees’ liabilities. Essar is expected to construct a 600 megawatt (MW) power plant for the project and a beneficiation plant in Chivhu.

Bimha said New Zim Steel will be operational in the next two years under phase one of the project. New Zim Steel is expected to produce 500 000 tonnes of liquid steel within 24 months under the initial phase and would increase to 1,2 metric tonnes per annum in the second phase.

The deal is a partnership between the government and Essar Africa Holdings in which the Indian firm holds 54% shareholdings. The initiative is a first that government has tried to have in a bid to commercialise its parastatals.

Zimbabwe’s industry consumes about 100 000 tonnes annually, leaving the rest for export.

The company is also planning a 600MW power plant, with a 300MW plant in the first phase.

Essar Africa director, Firdhose Coovadia told journalists that the company will import equipment from China, including a new blast furnace after it abandoned earlier plans to upgrade the existing plant at a cost of $750 million.

Coovadia also said the company will settle debts for both foreign and local creditors which stood at $450 million as at March 31. Of the creditors, KfW, a German firm is owed $187 million while Sinosure of China is owed $59 million.

Local creditors are owed $204 million, of which $110 million relate to employee liabilities including pensions while the balance is owed to statutory bodies.

— Additional reporting by The Source