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Essar Group said on Wednesday that it has completed the acquisition of Zimbabwe Iron and Steel Company (ZISCO).
The company has also made a commitment to invest $750 million (Rs 3,300 crore approximately) and it would take over all the liabilities of the company.
ZISCO will be divided into new entities called NewZim Steel Private Ltd and NewZim Minerals Private Ltd, according to the agreement.
Essar Africa Holdings will own 60 per cent in the steel joint venture and 80 per cent in the mining company while the rest of the stake will be held by the Government of Zimbabwe, Essar said in a statement.
“This closes the transaction process that started in August 2010 with a public tender for a majority stake of GoZ shareholding in ZISCO,” the statement said.
NewZim Steel will revive and expand ZISCO's capacity in two phases. Of this, $115 million will be invested in the first phase for achieving production of 0.5 million tonnes per annum (mtpa) capacity in 12 to 18 months. In the second phase, the capacity will be expanded to 1.2 mtpa including a power plant of 50 MW. The second phase will entail an investment of $275 million and will be completed within three years.
NewZim Minerals will explore and develop ZISCO's mining assets including Ripple Creek Iron Ore Mine in Redcliff, Zimbabwe. Exploration and related activities will entail an investment of $100 million in the first 18 months.
In the long run, the Essar Group will provide funding of up to $3.5 billion for the construction of a large-scale iron ore beneficiation project and related infrastructure, said a statement. It added that the beneficiation process will convert raw ore into a product that can be marketed internationally.
Essar Group also plans to invest in a greenfield 1,000 MW thermal power plant to support the needs of NewZim Minerals, depending upon the beneficiation plant's feasibility and requirements, it added.
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