Home » Arts & Culture » Govt to Pay Zisco Workers, Production in Two Years

ESSAR Africa Holdings on Friday said it will build a new 500,000 tonne steel plant at Ziscosteel for $650 million in two years, after resolving differences with government over mineral rights that stalled the project for nearly four years.

Essar, the African unit of India’s Essar Group in November, 2011 agreed to buy 54 percent in Ziscosteel in a deal worth $750 million, with the government keeping 36 percent and 10 percent to be owned by minority investors.

But the reopening of the steelmaker, now called NewZim Steel, was held up by squabbles between the partners over ownership of mineral claims, which the government eventually agreed to transfer 80 percent of the rights to Essar while keeping the remainder.

Essar Africa director, Firdhose Coovadia told journalists that the company will import equipment from China, including a new blast furnace after the company abandoned earlier plans to upgrade the existing plant at a cost of $750 million.

“After a significant review, we came to the conclusion that the plant will need a substantially new rebuild,” he said.

The new plant would produce 500,000 tonnes of steel per annum after 24 months, but capacity would more than double to 1,2 million metric tonnes per annum in the second phase of the project.

Zimbabwe’s industry consumes about 100,000 tonnes annually, leaving the rest for export. The company is also planning a 600MW power plant, with a 300MW plant in the first phase.

Coovadia also said the company will settle debts for both foreign and local creditors which stood at $450 million as at March 31.

Of the creditors, KfW, a German firm is owed $187 million while Sinosure of China is owed $59 million. Local creditors are owed $204 million, of which $110 million relate to employee liabilities including pensions while the balance is owed to statutory bodies.

“Apart from our commitment to settle the Sinosure and KfW debts, the size of the project is $650 million,” Coovadia said.

Industry minister, Mike Bimha said meetings would be held with individual creditors to agree on modalities of payment.

“In that regard, Zisco will be contacting each creditor over the coming weeks to initiate this process,” he said.

He said government and Essar had agreed to pay workers, who will start receiving payments from next week, he said.

“It was agreed to provide financial and other relief to the employees of Zisco. The substance of the relief has been communicated to those stakeholders at a meeting with shareholders at Redcliff on May 8,” Bimha said.

Coovadia said over the past week, Essar and its Chinese contractors have on the ground assessing the plant near Kwekwe in central Zimbabwe, and also meeting with local contractors.

More teams are expected in the country next week.

Source : New Zimbabwe

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