Zisco signs Mauritius deal

Government and the Mauritius-based steel firm Essar Africa last week signed the much-waited US$750 million deal to revive operations at Zisco.

There are one or two things that need to be put together at Zisco before actual steel production resumes. Fore example, plant equipment repairs and arranging transport for coal at the steel plant as well as energy supplies have to be sorted out.

We are looking forward to seeing actual steel production at Zisco resuming in the next 12 to 15 months, said Shonhiwa.

It took more than three years for government to find a suitable investor to partner Zisco in reviving operations.

Speaking from Redcliff, Zisco managing director Alois Gowo said the steel manufacturing firm did not retrench its workforce although it was riddled by viability challenges over the years.

We never retrenched any of our workforce through thick and thin.

However, we lost quite a number of people from all disciplines that include engineering, health and human resources as well as accountants as these left for greener pastures. It is our hope that we will make efforts to lure back the skills that we lost to neighbouring countries, he said.

Gowo said as soon as their partners were at Zisco they would go through the nitty gritties to strategise operations at the steel firm.

Meanwhile, Industry and Commerce Welshman Ncube told this paper that the deal was meant to yield meaningful contributions to economic development of Zimbabwe because Zisco is a strategic asset to the country.

Basically it means work can now resume at Zisco. Production of steel is now back on track and companies in the steel industry will now not be importing steel by-products as the products will be available locally, he said.

Under the arrangement, Essar Africa was expected to secure 54 percent of the Government stake in Zisco while at the same time the foreign investor would pay off Ziscos foreign and domestic debt US$340 million and invest in refurbishing blast furnaces three and four, among other liabilities.

The revival of Zisco sends positive signals to foreign investors.

The signing of the deal has injected confidence to other investors that the countrys investment climate is favourable given the fact that such a big investor has invested in the country.

The country will not be importing steel by-products because production will be taking place at Zisco. Other firms such as Lancashire Steel and those in the manufacturing of steel products like windows and door frames will have their production capacity boosted as raw materials would be locally available, he said.

He said Zisco employees that had gone for two years without salaries would now be getting paid as production was expected to resume at the Redcliff-based steel maker.

Zisco, the largest steel producer north of Limpopo suspended operations in 2008 due to financial challenges and a huge debt overhang.

In 2004, efforts to revive operations at the steel producer hit a brick wall when Global Steel Holdings of India reneged the US$400 million deal under unclear circumstances.

Between the first and second quarter of 2010, another attempt to revamp Zisco hit a snag after Government principals rejected bids by firms such as Jindhal Steel and Power of India, Arcelor Mittal of South Africa, Reclamation and Murray and Roberts (SA), Sino-Zimbabwe, the Gateway Consortium and Steelmakers Zimbabwe as they (principals) felt that companies of such magnitude would end up dictating terms to Zimbabwe.

Essar Africa has already indicated the intentions to boost production at Zisco to 14 million tonnes a year. At its peak, Zisco produced 1 million tonnes of steel a year and employed about 4 000 workers.