HARARE - Essar Africa Holdings limited (EAHL) a subsidiary of the Indian based Essar Group has snatched 60 percent of the government 90 percent shareholding in the ailing Zimbabwe Iron and Steel Company (ZISCO) which amounts to 53 percent stake-in a partnership deal that seek to revive operations at the steel company.
The remaining ten percent is owned by local business people Essar Holdings won the bid to partner the government beating other competitors who were after the government stake in ZISCO which include another Indian firm Jindal Steel and Power as well as ArcelorMittal which had been shortlisted as potential investors but were turned down by the government last month saying the two companies were big and that the government wanted a medium sized investor.
The Zimbabwe government has been on the hunt for a potential investment partner to revive the fortunes of the ailing ZISCO whose production capacity tumbled amid allegations of mismanagement and corruption involving ZANU-PF officials. The steel giant was also indebted to the tune of US$240 million which the government was failing to pay. The steel company has the potential to produce one million tones of steel annually. As part of the deal Essar will take over the government debt amounting to US$240 million accrued over the years.
Essar Resident Director Firdhose Coovadia said his company was delighted to have been awarded the preferred bidder. We believe ZISCO is well positioned to be a low cost steel producer that can meet the growing demands of the regional steel market and capitalize on the robust forecasted growth in sub-Saharan Africa.
Industry and Commerce deputy minister Mike Bimha said the deal was worthwhile to Zimbabwe adding that the resumption of production at ZISCO will undoubtedly have positive downstream effects in the overall industrial productivity.
The engagement of the foreign partner will relieve the government entirely of its debt obligations with regards to ZISCO but most importantly it will revive the countrys economic growth and development said Bimha.
Native Investments Africa owner Philip Chiyangwa, who is a nephew to President Mugabe last month wrote a letter seeking his support to be awarded the tender to his subsidiary company Zeco Holdings as part of the indigenization and empowerment drive has also lost out. Essar Holdings operates a number of subsidiaries involved in the exploration, production.refining and retailing of petroleum products and consumable fuels. Part of a larger group, Essar has a market capitalization of US$10 billion and is planning a listing on the LSE.
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