HomeNewsGovernment reruns Zisco tender .. . but mistrust, debts and sanctions may...

Government reruns Zisco tender .. . but mistrust, debts and sanctions may weigh the privatisation deal

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Government on Wednesday opened a fresh expression of interest for Ziscosteel, saying it was not comfortable with multinationals partnering its ailing steelmaking operation, the largest in Zimbabwe, still under sanctions.
Estimates put the parastatal’s recapitalisation costs at about $240 million or more.
Cabinet in May threw out bids by India’s Jindal Steel and Power and ArcelorMittal South Africa, which were favoured to buy as much as 60% of Zisco, in which government controls an 80% equity interest.
Last month, Industry and Commerce minister Welshman Ncube said government rejected the bids on “mistrust that such big companies might be too powerful to control” and that they could “kill competition”.
In a statement on Wednesday, Ncube reiterated government’s privatisation and roll-back plan to recapitalise the parastatal, but emphasised government preferred a medium-sized technical partner. The new tender runs for three months, but papers must reach the industry ministry by September 24.
“The Ministry of Industry and Commerce wishes to advise interested parties that bids for a strategic partner for Zisco are now open,” Ncube said in the statement.
“Bid documents are being sold, on behalf of Zisco, at the Ministry of Industry and Commerce.”
Zisco is currently operating with more than 90% of unused capacity; in annual terms the rate of installed capacity is about one million tonnes per annum.
Ncube says government wants an investor who will inject money to rejuvenate Zisco operations as well as soak away its debt overhang to a growing list of creditors, including German bank, KfW Bankengruppe that it owes $40 million.
The Redcliff-based company’s total debt stock is estimated at about $300 million.
Last month, Ncube admitted the delay in recapitalising Zisco was stalking the economy, slowing and bidding up the cost of recovery.
“Once Zisco is revived, markets would be readily available, at the moment there are orders for steel that Zisco cannot satisfy,” he said.
To counteract domestic shortage, holding up capacity utilisation, Zimbabwe’s steel-dependent industries — mining, manufacturing and construction – have resorted to imports from South Africa, and this has exposed their operations to frequent changes in global supply and price patterns and to exchange rate losses.
Year-on-year, steel price has increased by nearly 10% this year, as global steel demand firms, led by China, amid global concerns of inventory depletion in the third largest economy in the world.
China’s steel demand is estimated to have risen 35,7% in April in annualised terms and output slowed to its lowest level since February in June.
Last month, Clarkson Plc, the world’s biggest shipbroker, estimated that global shipments of iron ore would rise 6% to 961 million tonnes, a record high.

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