The Essar Group may have to renegotiate the terms of the contract if it wants to continue with its plans in the African nation.
Zimbabwe won’t sell 90% of its iron ore resources to one company, mines and mining development deputy minister Gift Chimanikire said. He added that the provision in the current pact that allowed this was wrong.
“We have said to them (Essar): Do not expect us to hand over these resources. As government, we cannot just do that,” Chimanikire was quoted as saying by The Herald.
An Essar Group spokesman said it was against company policy to comment on speculative reports.
“Essar continues to hold discussions with the Zimbabwe government over a number of issues relating to the Zisco (Zimbabwe Iron and Steel Co.) transaction, and we continue to make progress. However, we would not like to comment on any specific points,” the spokesman said.
Essar’s deal to gain access to a captive source of iron ore has been caught in political crossfire ever since it was signed in early August.
The Essar Group and Zimbabwe announced the launch of NewZim Steel Pvt. Ltd and NewZim Minerals Pvt. Ltd to revive Zisco, committing an $850 million investment by Essar Africa with the promise of job creation.
The shareholding structure in the two joint ventures was envisaged at 60:40 and 80:20, respectively. Essar also committed to revive Zisco to its original capacity and unveiled a plan to double annual capacity to 2.5 million tonnes.
NewZim Minerals was to undertake exploration and technology assessment, with a testing programme commencing in the first 18 months. After this, depending on the outcome, it was to construct a large-scale beneficiation project and related infrastructure for an estimated expenditure of $3.5 billion. – www.livemint.com
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