Essar Africa Holding (EAHL), a privately held company of the Essar Group, will form two joint venture companies with the Zimbabwe Government — one for reviving Zimbabwe Iron and Steel Company (Zisco) and the other for developing mines. EAHL will invest about Rs 3,375 crore ($750 million) to revive the ailing State-owned Zisco.

Essar will own 60 per cent stake in the steel venture and 80 per cent in the mineral venture. The Zimbabwe Government will hold the remaining stake in both the ventures. Essar will also release the Zimbabwe Government from its guaranteed obligations under the Zisco debt.

The transaction will close upon facilitation of various approvals, including those from the enabling ministries and an acceptable settlement of the Government guaranteed debt obligations of Zisco, EAHL said in a press release on Thursday. Upon closing, EAHL and the Government will also finalise and settle liabilities such as unpaid wages and amounts due to various local creditors, it added.

Zisco was an integrated steel company with a rated capacity of one million tonnes for the manufacture of long products. It was non-operational for the last few years due to shortage of funds for working capital and maintenance of plant and equipment, irregular supply of power and other critical raw materials and infrastructure. The company also owns iron ore and limestone mining rights and other claims, which require significant investment in exploration and development, said the release.

Prof Welshman Ncube, Minister of Industry and Commerce, Zimbabwe Government, said the signing of this agreement will serve as a catalyst for significant future foreign direct investment into Zimbabwe.

“We were impressed by the quality and scale of the steel operations of the Essar Group and their capabilities in other sectors such as power generation, mining, shipping and logistics. With the entry of EAHL as a partner, various stakeholders of ZISCO, especially the employees, will benefit significantly,” said Mr Nyasha Makuvise, Chairman of ZISCO.

Mr Firdhose Coovadia, Resident Director, Essar (Middle East and Africa) and Director, EAHL, said, the new venture will be well positioned to be a low-cost steel producer that can meet the growing demands of the regional steel market and capitalise on the forecasted growth in sub-Saharan Africa.

“The revival of Zisco will require the cooperation of various parties and entail significant capital expenditure. The Essar Group will bring in investments and expertise in steelmaking, beneficiation, project management, construction, power generation and logistics,” he added.

Essar Group's current operations in Africa include oil and gas assets in Nigeria, Kenya and Madagascar, telecom assets in East Africa, BPO operations in South Africa and coal concessions in Mozambique.

Related Topics
comment COMMENT NOW