Zimbabwe strikes US$105m steel deal

04 Nov, 2022 - 00:11 0 Views
Zimbabwe strikes US$105m steel deal President Mnangagwa shares a lighter moment with African Development Bank Group president Dr Akinwumi Adesina at the Africa Investment Forum in Abidjan, Cote d’ Ivoire, yesterday. — Picture by Joseph Nyadzayo

The Chronicle

Kudakwashe MugariIn Abidjan, Cote d’Ivoire

FROM economic reforms that are investor friendly, and offering incentives on investment, Zimbabwe, under the Second Republic, has turned the corner in its re-engagement efforts with the international community leading to a marked change in perceptions on the global arena, thus attracting foreign direct investment.

Speaking to investors at the ongoing Africa Investment Forum 2022 here on Wednesday ahead of the taking up of a US$105 million steelmaking project.

President Mnangagwa said his Government was aware that capital is fearful, and, therefore, averse to volatility of any nature, hence the implementation of comprehensive reforms by his Government.

“Through the Second Republic, things have changed drastically. We have a policy; our foreign policy is to engage and re-engage. We engage with all nations of the international community, for we are a friend to all,” he said.

“We realised that global capital can only go to economic predictions where they feel comfortable. So, we have instituted comprehensive economic reforms in the country in order to be competitive. And, I can assure you that we are receiving more investment now than even before sanctions.”

The Steelmakers Limited-supported project finance venture is one of the three deals worth a combined portfolio of US$265 400 000 that the Zimbabwean delegation, led by the President, presented to the forum for possible funding. 

It involves the construction, set-up and installation of an integrated steel plant to produce about 300 000 tonnes of merchant mill-rolled products yearly.

There will also be a 300MW power plant.

The creation of a conducive environment through ease of doing business has seen the cost of commerce drastically improving.

On natural resources, particularly iron and steel, President Mnangagwa encouraged investors to take up opportunities created through Steelmakers, saying Zimbabwe has “huge unearthed reserves” of iron ore.

“Those who want to make money go to Steelmakers (Limited). You will make money. Just like all other developing countries, we have been constructing railway lines, dams, roads, housing, and airports in all these sectors and the market assessment is huge,” he said.  

There is a huge market for steel products in Africa, with 37,4 million tonnes having been used on the continent in 2021, about 19,9 million of which is imported. 

“I have no doubt that if we get enough funding, in terms of resources we have enough. Down the line, in five years or so, we will be able to contribute significantly to the 93 percent of steel imported outside of the continent,” the President said.

“The other company, a Chinese company (Dinson Iron and Steel Company), we allocated them a concession. And, that area has over 32 billion metric tonnes of resources. I think that will go beyond 100 years. Those who want to invest in steelmaking, this is the area which you may invest in.”

President Mnangagwa’s speech whetted investor appetite, leading to a commitment to the steelmaking project.

In an interview here last night, Steelmakers Limited chief executive officer, Dr Kalpesh Patel, confirmed the interest shown in the deal, adding that further details will be availed in due course.

“The simple word is we won. We have secured funding, and we have started the work on the ground. The details will emerge. These have just been discussions that have emanated from the commitment. And, it has to do with funding of the expansion of the steel plant, which will take us to 300 tonnes plus a 300 megawatt power plant.

“This is the investment we have been talking about, US$150 million. About US$105 million has already been secured plus the US$45 million we have had today will also be forthcoming. We are under means of confidentiality for now, but with time it will be known.”

The firm envisages to use the funds to expand operations in the Masvingo area, and acquire concessions for more iron ore deposits as well as increase their steel products.  

Finance and Economic Development Minister, Professor Mthuli Ncube, said in the next three to five years, Zimbabwe will be the major steel producer in Africa.

Finance and Economic Development Minister, Professor Mthuli Ncube

“We will see the ramp-up in steel production through the growth of Steelmakers, the launch of the Manhize steel project, and the revival of Zisco Steel. We are in a good space to be a major producer of steel,” he said.

Prof Ncube said investors at the Africa Investment Forum 2022 have shown a lot of interest in Zimbabwe.

“His Excellency was able to put up a good speech in terms of Zimbabwe being open for business,” he said.

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