Home » Industry » AAG Says Ziscosteel Essar Deal ‘Daylight Robbery’

THE Affirmative Action Group (AAG) on Wednesday told Parliament that government must reverse the acquisition of Ziscosteel by Essar Africa Holdings, arguing the economy would not gain any significant benefits from the deal in its current structure.

Government agreed to the deal, meant to result in the rebirth of the defunct Redcliff-based steel maker four years ago, but its take-off remains doubtful as no major developments have taken place at the plant to date.

The deal, estimated to be worth $750 million at the time, saw Essar taking up 54 percent of the shareholding in Ziscosteel, with government owing 36 percent and private investors taking the remainder.

Appearing before the parliamentary portfolio committee on indigenisation and empowerment, AAG president Chamu Chiwanza said government had erred by agreeing to the terms of the transaction which were skewed in favour of the investor.

“We are concerned as the AAG about the Essar deal which the good Parliament has chosen to keep quiet about. We felt (the then minister) Welshman Ncube shot from the hip when he signed that deal,” Chiwanza told the committee.

“When we did an analysis as AAG we thought that was daylight robbery as far as us, the indigenous people are concerned and we are lobbying this committee to have the deal reversed with immediate effect.”

Chiwanza said the terms of the deal gave Essar authority to mine, process and export ore for a very long period, estimated at 20 years, which was not commensurate with their investment.

“We can’t just give our ore away to foreigners for such a long time because they have paid debts and paid salaries,” he said.

“The technicalities of the Essar deal are wrong, we mortgaged our resources.”

Essar Africa Holdings agreed to buy Zisco in 2011 but there has been no progress in the revival of the steel maker since with workers unpaid for several months.

With much of the plant and equipment at Zisco, including the key blast furnaces beyond repair, meaning Essar would have to invest billions in building the whole company anew.

Source : New Zimbabwe