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Minister Bimha

DEFUNCT steel producer, NewZim Steel, formerly Ziscosteel, will resume production in the next two years after the completion of plant upgrades, a cabinet minister said yesterday.The Kwekwe-based steelmaker has been offline in over five years.

Ziscosteel is now majority owned by Indian conglomerate Essar Africa Holdings after it acquired a 54 percent stake from the government in a deal estimated at $750 million in 2011.

But the value of the investment has gone up due to delays in implementing the deal over squabbles on mineral rights and other technicalities, necessitating a review of the initial investment.

The government owns a 36 percent stake while private investors hold the remainder.

Industry and Commerce Minister Mike Bimha said government and Essar had agreed to operationalise the implementation phase of the deal with immediate effect.

The process would be done in two major phases.

“As per the original bid provisions, the initial phase of the project will involve the revival of NewZim Steel to a production capacity of 500,000 tonnes per annum within 24 months which would be increased to 1.2 million tonnes per annum in the second phase,” Bimha said.

Essar Africa director Firdhose Coovadia, said the conglomerate would invest $650 million in the first phase of the project, which also involved setting up a 600 megawatt coal powered power station in Hwange.

“What we got is a license to produce 600MW, our own need is initially 300MW,” he said.

He said engineers from India as well as China were already on the ground rehabilitating old plants and installing new ones such as furnaces.

Once production resumes, Coovadia said the firm would export most of its steel products as Zimbabwe required less than 100,000 tonnes per annum.

Ziscosteel owes various creditors over $450 million as at the end of March, with $110 million going towards worker related benefits.
Other creditors include KFW of Germany owed over $187 million and Sinosure of China, with dues amounting to $59 million.

The firm is expected to employ around 7,000 workers at its peak.

Ziscosteel workers who had not been paid a cent in over two years, would start receiving their benefits next week, said the firm’s chairman Nyasha Makuvise.

Meanwhile, Lancashire Steel, a subsidiary of Ziscosteel, is expected to commence production in six months.

Analysts say the revival of Ziscosteel will breathe new life into the struggling economy. — New Ziana