Chinese firm to resuscitate Zisco
HARARE – Chinese conglomerate, R&F, has agreed to inject up to $2 billion to revive the defunct Zimbabwe Iron and Steel Company (Ziscosteel), with first production of stainless steel expected in 18 months, a cabinet minister said on Monday.
R&F is a multi-billion dollar company with interests in various areas including real estate, tourism, mining and construction in different countries.
Ziscosteel had been sold to Indian firm Essar Africa Holdings in 2011, but due to delays in consummating the deal, Essar pulled out as it had committed the funds it had earmarked for Zisco elsewhere.
The deal, worth an estimated $750 million, was stalled by squabbles over mineral rights and other technicalities.
Industry and Commerce Minister Mike Bimha said the new deal, to be funded through R&F’s investment arm based in Hong Kong, will be implemented in three phases, culminating in the production of stainless steel.
“A month ago I went to China, representing government to sign the agreement and therefore what we are now doing is looking into how best to implement this project,” he said.
“We are looking at an initial injection of over $1 billion and it will probably come to $2 billion when we proceed, but it is not a small project, it is a huge project.”
Bimha was speaking after R&F founder and president Zhang Li paid a courtesy call on President Robert Mugabe at State House.
The deal, he said, was negotiated (for) over the past six months, while the Chinese engineers who did due diligence on the project concluded that only about 15 to 20 percent of the equipment at the plant was still usable.
“It (the deal) is configured in a way that we would want the investors to focus more on steel making and we will hive off some of the subsidiaries of Zisco which will allow other players to participate. You have subsidiaries like Lancashire steel, like the coke ovens and a number of similar subsidiaries these will be hived off so that the new company can concentrate more on steel making,” he said.
“There is also a lot of work to be done in terms of ensuring that we finalise on the implementation matrix, there is also a lot of work to be done in terms of getting a number of ministries and government departments to make their contributions in making sure that this project becomes a success.”
Bimha allayed fears that the new deal might face a similar fate to the one in place before.
“This time around its different, the entire government is supportive of this project and that is the reason for us to come here, the President is fully behind this project, therefore I think in terms of commitment there is 100 percent commitment from government to make it succeed,” he said. Ziscosteel, once the biggest integrated steel works in Africa, outside South Africa, folded operations in 2008 after experiencing serious viability problems. – New Ziana.