The source told businessdigest that government two weeks ago approached ArcelelorMital and Jindhal of India to invest US$230 million for a 60% stake but will announce the winner of the bid this week.
But sources said Jindhal had made “impressive investment offers” to government outside steel, an offer that government viewed favourably.
This comes after government offered the two companies shareholding in the troubled steelmaker after a Germany company attached Zimbabwe’s assets over a US$50 million debt.
The imminent threat forced government to re-invite two steel companies — Jindhal Steel and ArcelorMittal — to take up 60% equity in the troubled steel maker.
Government two weeks ago sent letters inviting Jindhal Steel of India and ArcelorMittal of South Africa to urgently inject around US$230 million into Zisco for a 60% stake in the steelmaker.
Part of the US$230 million will be used to retire a Euro 40 million debt accrued by Zisco in 1998, a source said.
President Robert Mugabe reportedly rejected ArcelorMittal and Jindhal’s bids saying the two entities were too big. According to Industry minister Welshman Ncube, Mugabe threw out the Zisco bids arguing that the two companies were too big. Mugabe is said to have recommended medium-sized companies to buy equity in Zisco. But analysts say Zisco needs an investor with deep pockets to get the steelmaker back on stream. Jindhal is said to have made a commitment to invest over US$2 billion in getting the plant operational, build a stainless steel plant and a 2 000 megawatt power station. The power station would help ease the country’s power problems.
Jindhal is the world’s third largest steelmaker by tonnage with an annual turnover of about US$2, 1 billion and forms part of the larger Jindhal Group with total assets in excess of US$12 billion. Jindhal’s rival, ArcelorMittal South Africa, a subsidiary of the world’s largest steel manufacturer, ArcelorMittal Group with a market capitalisation in excess of US$35 billion, is also said to be back in the race.
ArcelorMittal has a presence in more than 60 countries. By February, Arcelor was said to have been holding onto cash of over US$300 million to invest in Zisco in anticipation of a possible acquisition of the Zimbabwean steel asset and make its first foray into iron production.
Government is frantically trying to save the auctioning of five properties that it owns in South Africa over a 40 million euro debt. Zisco owes a German development bank, KFW Bankgruppe, after the company failed to repay a loan over a prescribed period of time. Properties in Pretoria, Johannesburg and Cape Town are due to go under the hammer on July 1 this year.
The attachment of the Zimbabwean properties comes almost two months after South African civil rights group, Afriforum, secured a High Court writ of execution to attach four Zimbabwe government owned properties in Cape Town.
Afriforum attached the four properties on behalf of white commercial farmers who were dispossessed of their land under the land reform exercise.
The organisation had successfully acted on behalf of several Zimbabwean farmers dispossessed following Mugabe’s controversial land grab policy.
KFW Bankengruppe and Afriforum have reached an agreement to share proceeds from the sale of Zimbabwe’s Cape Town properties that were initially attached by Afriforum.