Indian firm eyeing Zisco

Ziscosteel stopped operations in 2008 at the height of an economic crisis, plagued by a lack of capital to re-e quip its plants.

The government holds about 70 percent in Ziscosteel, once the largest integrated steelworks in the region, and has recently been keen to sell its shareholding.

Informed sources say government wanted Jindal Steel and Power to clear all the liabilities of Zisco, a condition rejected by the Indian firm.

Jindal’s Africa business head Ashish Kumar said: “In our proposal, we have suggested a mechanism to the government to settle the existing debt. Since we are already operating in Mozambique and South Africa, the acquisition of Zisco would give us a wider reach in the continent,” he said.

It is believed the deal is worth US$200 million and JSPL was expected to fund the transaction through a mix of debt and internal accruals.

A second shortlisted bidder was ArcelorMittal South Africa Ltd. (ACL.JO), a unit of the world’s largest steelmaker, ArcelorMittal (MT).

But its bid has been rejected ostensibly because presidential administration believes the company is “too big” according to Industry minister Welshman Ncube.

The Zimbabwean government, which owns an 89 percent stake in Ziscosteel, previously didn’t have intentions to sell, but the new coalition government, installed in February last year, has said selling assets would be an important step in economic reform.

The government has put up a 60percent stake in the steelmaker and is expected to announce the final bidder in the next week.

Industry experts say significant amount of investment would need to be made in order to operate Ziscosteel’s main plant in Redcliff, central Zimbabwe.

The plant produces long steel products from two blast furnaces that have a combined steel capacity of 1 million tons a year. The plant also has its own captive mines that produce iron ore and dolomite, two ingredients used in steelmaking.