ESSAR resident director for Middle East and Africa Firdhose Coovadia on Tuesday could not disclose how much his company would commit in capital saying the group had an idea of the capital injection needed. Firdhouse said: “We have done a full study of the opportunity and we understand what is needed. We are committed to this opportunity.” He said once the implementation of the transaction is finalised, his company will need 18 to 24 months to get Zisco running again.The Zimbabwe government agreed to sell its 53% stake in Zisco to ESSAR, a company with interests in energy, steel, telecommunications and oil, after receiving earlier bids from Arcelor Mittal South Africa, Jindal Steel of India and Gateway Corporation.Zisco chairman Nyasha Makuvise could also not be drawn into saying how much ESSAR would invest in fresh capital, but Industry deputy minister Mike Bimha said the company will immediately assume the steel maker’s US$270 million debt. The steel maker has two major debts, one to a Chinese bank that was due and has been renegotiated to be paid by end of 2011. The other debt involves US$240 million from a German bank. Zisco has a capacity to produce one million tonnes of steel yearly, but has been hurt by sanctions, debts, lack of working capital and aging equipment. The company has distribution centres in Bulawayo, Kwekwe and Harare and derives raw materials security from its subsidiary Buchwa Iron Mining Company in Shurugwi.ESSAR Energy Holdings Ltd operates as a holding company which through its subsidiaries engages in exploration and production, refining and retailing of petroleum products. ESSAR Energy Holdings Ltd operates as a subsidiary of ESSAR Global Ltd. The company is reported to have a market capitalisation of US$10 billion and is said to be planning a listing on the London Stock Exchange.In 2008, the company was producing less than 12 500 tonnes, way below the break-even capacity of 25 000 tonnes. It is not clear what ESSAR would bring to the table, but industry experts say the revival of Zisco hinges on the availability of coal, energy, and a functional railway system.Gateway Corporation, once a joint bid between Jindhal Steel and businessman Chemist Siziba and a retired Zimbabwe National Army Colonel Gift Mkondo, was prepared to pay US$90 million for 51% of Hwange Colliery Ltd’s total issued share capital, a move that would guarantee Zisco reliable coal supplies.The consortium was backed by a regional development bank and a large development corporation. At least US$327 million will go into debt settlement.Gateway proposed US$76 million in capital expenditure. The company hoped to lift output to 4,8 million tonnes of coal inside the first year. A further US$100 million will be advanced to further lift output to six million tonnes.The company had sought to invest US$12, 5 million in the mothballed Munyati Power Station. Once operational, the Midlands-based power plant was expected to produce around 80 megawatts in three months.Of the 80 megawatts, 20 megawatts will be dedicated to Zisco while the remaining 60 megawattd will be for national consumption. Gateway was planning to set up a 2 000 megawatt thermal power station and a stainless steel plant.At least US$650 million would have been advanced into resuscitating Zisco. Acquisition of 21 locomotives for the National Railways of Zimbabwe would have been undertaken the consortium said.
Chris Muronzi
