A high-powered technical committee has been appointed to finalise the takeover of Ziscosteel by Indian firm, Essar Holdings.
BY OUR STAFF
The committee, chaired by chief secretary in the Office of the President, Misheck Sibanda, constitutes permanent secretaries of Mines and Industry, Zisco board members and senior executives from Essar.
Its mandate is to oversee the successful conclusion of the transaction that had taken longer than expected, a time lag attributed to bureaucracy in government.
Industry and Commerce minister Welshman Ncube told Standardbusiness last week that the technical committee was “working on modalities and implementation of the agreement”.
Since announcing the US$750 million investment in the troubled steelmaker in 2009, Essar has failed to conclude the transaction, due to mixed signals from government and legal impediments.
The transaction had been held back by government’s delay in transferring iron ore claims to New Zim Minerals (NZM).
The claims are at Bimco, Ripple Creek and Mwanezi.
The iron ore would be used as raw materials at New Zim Steel (NZS).
Government ministries — Industry and Commerce and Mines and Mining Development — have not been singing from the same hymn sheet.
Last year, Essar had to seek assurance from Ncube after Mines deputy minister Gift Chimanikire was quoted by state media saying the ministry did not want Essar to have a monopoly over claims and that indigenous players had shown an interest in the claims.
“We don’t want to create a monopoly by giving all the claims to one company. We have to allow other players, for instance, indigenous players to also be able to explore the ore,” Chimanikire was quoted as saying.
This forced Essar to seek a reconfirmation from Ncube on the September Cabinet decision to transfer the iron ore claims at Mwanezi to NZM. The deal, when completed, would result in government having a 40% stake in NZS with the balance owned by Essar.
Under the NZM arrangement, Essar and government would have 80% and 20% shareholding respectively.
Essar won the bid for Zisco in 2011, after its proposal was seen as feasible, as the firm agreed to take over the troubled steelmaker’s debt to KfW of Germany and another owed to a Chinese firm.
Analysts are wary the transaction has taken longer than expected to complete and that this would work against the country’s efforts to attract foreign investments.
According to the Mid-Term Plan, government wants to see investments contributing 20% of the gross domestic product by 2015 from the current 4%.
The delay in finalising the transaction means that the cost of running the project is increasing.
The company has to inject more than US$600 million to produce a million tonnes of steel per annum at NZS, double the amount the firm had projected.