No suitor yet for ZimAlloys
Bulawayo – Zimbabwe Alloys Chrome, formerly one of the largest ferrochrome producers in the region, says it is still hunting for investors to inject funds into the bankrupt company facing liquidation.
Early this year, ZimAlloys hinted that it was evaluating three investors bidding to take over the technically insolvent miner, which was placed under judicial management last year but to date nothing has materialised, worsening the plight of workers and the downstream industries.
The mining firm ceased operations in 2008 due to lack of capital, but resumed in 2012 as use of multiple foreign currencies reduced production costs although its woes are still far from over.
Export ban on raw chrome imposed by government in April 2011 and the global decline on the price of the commodity further haunted the Gweru (Midlands Province)-based miner.
Ferrochrome is raw material in the manufacturing of stainless steel.
The High Court placed ZimAlloys under final judicial management on November 27 after it was placed under provisional judicial management on July 24 after the ferrochrome producer’s debt rose to startling levels. ZimAlloys finance director, Munyaradzi Dube, is still optimistic the company will get an investor this year.
“Yes we are still searching for potential partners. Investors have been coming from all over and there is hope,” Dube says.
Among the potential investors are Chinese and Indian firms.
As part of its survival tactics, in January ZimAlloys also entered in to a partnership with two Chinese firms to process the company’s huge stockpile of ferrochrome slag in a deal worth about US$2.3 million.
Zimbabwe’s chrome ore reserves are high grade and estimated at around 560 million tonnes (about 15 percent of global supply) situated along the Great Dyke (which stretches from Mashonaland Central province to the Midlands province), a mineral strike stretching 530 kilometers.
Industry analysts say the failure by companies to attract financing, coupled with erratic power supplies, has hampered efforts of chrome producers to boost local refinery capacity.
The mining firm, which has one of the oldest chrome smelting plants in Africa ‑ having been built in 1949, faces liquidation if it fails to raise US$40m to refurbish three smelters and other operational costs.
Zimbabwean investors, Benscore Investments Ltd, own 85 percent of Zim Alloys while Johannesburg Stock Exchange-listed Metmar Ltd owns a 13.1 percent stake of the formerly Anglo American-owned miner.
South Africa and Zimbabwe are the major ferrochrome producers in the Southern African Development Community (SADC).
The SADC region has the capacity to supply more than 50 percent of the world production if more funds are invested in the sector currently facing a number of challenges.