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of Ziscosteel to the Mauritian firm in a US$750 million deal that will relieve the State of huge debts.
Under the deal, the Government will tra-nsfer 54 percent of its shareholding to Essar Africa. The State previously held 89 percent stake.
Minority shareholders in Ziscosteel, who hold an 11 percent stake, will not be affected and are free to sell their shareholding.
The contract – which has an indefinite timeframe – will also see Essar Africa and the Government partnering in an 80-20 sha-reholding arrangement in an iron ore joint venture.
Industry and Commerce Minister Welshman Ncube said the contract covers the shareholders’ investment and future plans.
Essar Africa will take over Government’s US$340 million foreign and domestic liabilities in the steel giant.
The Mauritian firm will complete outstanding work regarding the resuscitation of Zisco, including realigning blast furnaces and repairing coke oven batteries.
“This provides for Essar to take over and release Government from its debt obligations in respect of the external debt owed by Zisco to foreign entities such as KFW and Sino-Sure,” said Minister Ncube.
Prior to this, the Redcliff-based firm’s residual value was US$45 million against debts of US$340 million.
Essar Africa and the Government also ag-reed to pool resources and clear US$22 million in salary-related arrears to workers.
Minister Ncube said the sale of Zisco to the Mauritian company followed intense bidding by several firms.
President Mugabe and Prime Minister Morgan Tsvangirai approved of the bid.
Minister Ncube said the deal’s finalisation marked a milestone in Zimbabwe’s economic growth.
Essar Group vice chairman Mr Ravi Ruia said his company was committed to reviving Zisco and contributing to national economic development.
He said they would ensure adequate availability of raw materials like coal, transport and provide technical capacity to Zisco- steel.
Mr Ruia said the investment was a pure business decision while cordial relations between Zimbabwe and India had also influenced the outcome.
“I hope this will accelerate industrial development and help develop a new generation of small to medium enterprises in Zimbabwe,” said Mr Ruia.
He said Essar Africa would invest significantly in rehabilitating and repairing rail infrastructure to ensure consistent supply of coking coal from Hwange.
The firm will in the medium-term also invest in a new power plant to avoid interruptions caused by crippling energy deficits rocking Zimbabwe.
New Delhi’s Ambassador in Harare, Mr Venkatesan Ashok, said the agreement showed India’s confidence in Zimbabwe.
“Given the Indian firm is coming to imp-rove, value add and manufacture steel, the investment will have a significant impact on Zimbabwe,” he said.
Ambassador Ashok said it was also a sign of growing economic and business relations between the two countries.
An Indian parastatal recently partnered a local firm in establishing an earth-moving distributorship in Zimbabwe.
India is also collaborating with Zimbabwe in the fields of education and science.
Zisco is an integrated steel firm with capacity to produce one million tonnes of steel per annum.