INDUSTRY and Commerce minister Welshman Ncube has said the finalisation of the deal to buy Zimbabwe Iron and Steel Company (Zisco) by India’s Essar African Holdings now hinges on the disposal of the steel making firm’s subsidiaries.
Ncube told businessdigest the Attorney General’s office is currently sifting through the draft agreements.
“The draft agreement is now with the AG’s office and they have since raised issues which I have not been fully apprised of, for which they need explanations,” Ncube said. “But one of the other issues is to do with the disposal of subsidiaries which are owned by Zisco which they want us to deal expressly with.”
Buchwa Iron Mining Company is one of the subsidiary’s which owns and operates several iron ore mines and limestone quarries.
Ncube said the objections raised would impact on the finalisation of the much-awaited deal.
“We wanted them (AG) to finish going through the paperwork before end of month so that we can sign the agreement soon. But it appears it would take a bit longer,” said Ncube.
Last week, State Enterprises Restructuring Agency (Sera) executive director Edgar Nyoni told the State Enterprises and Parastatals Management parliamentary portfolio committee that it would “take a little longer to tie up the deal”.
Nyoni said Essar representatives had since gone back to their headquarters for further consultations.
He said differences in evaluating how much Zisco was worth had held up progress while Essar thought that iron ore resources were part of the deal.
Ziscosteel, once a major foreign currency earner, is the largest steel works in the country but over the years the company has faced many operational problems and has been dogged by corruption scandals.
Full scale operations came to a grinding halt in 2008 at the height of Zimbabwe’s economic meltdown after the company had accumulated debts of around US$300 million, which Essar intends to settle as part of the deal.
The Zisco/Essar deal has been on the cards since last year when the Mauritian-based company agreed to buy 54% of the company for a reported US$60 million. The company will also assume Zisco’s liabilities.
Essar Energy Holdings Ltd operates as a holding company which, through its subsidiaries, engages in exploration and production, refining and retailing of petroleum products. It is 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.
Government has been looking for investors for the iron and steel company since it disbanded a $400 million deal with Global Steel Holdings Limited of India years back.
This followed disagreements over operational modalities between the two partners.