Essar group has reached a deal to acquire majority stake in Zimbabwe Iron and Steel Company (ZISCO) and would invest an estimated $750 million for revival of the African nation’s state-run steel maker.

The Ruias-led Indian conglomerate said in a statement that its privately held company Essar Africa Holdings has reached an agreement with the Government of Zimbabwe for revival of ZISCO.

While Essar did not disclose the investment amount, sources said it would make an initial investment of $ 750 million to help restart of operations at the Zimbabwe firm, which had ceased operations due to capital constraints.

Last year, the Zimbabwe government had agreed to sell its majority stake in Zisco and then launched a public tender for the same.

As per the deal, Essar Africa Holdings and Zimbabwe government would set up two joint venture companies that would acquire all the steel and mining related assets and liabilities of ZISCO and its subsidiaries.

Essar and Zimbabwe government would own 60 per cent and 40 per cent stake respectively in the steel JV. On the other hand, the minerals JV will be owned 80 per cent by Essar and 20 per cent by the government of Zimbabwe.

The transaction will close in due course upon facilitation of various approvals, including approvals from the enabling ministries and a settlement for transfer of Zimbabwe government’s guaranteed debt obligations of ZISCO to Essar.

ZISCO is an integrated steel company with capacity of 1 million tonnes for manufacturing of long products. It has been non-operational for the last few years due to shortage of funds and maintenance of plant and equipment, irregular supply of power and other critical raw materials and infrastructure.

ZISCO also owns iron ore and limestone mining rights and other claims, which require significant investment in exploration and development.

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