Government on Tuesday announced it had given India’s Essar Group the right to buy 53% of Ziscosteel in the second round of bidding that ended in September, but is still in talks to finalise the terms and conditions of the transaction.
Government opened a fresh expression of interest for Zisco in August after rejecting bids by India’s Jindal Steel and Power and ArcelorMittal South Africa, saying it was not “comfortable” with a multinational partner for the ailing steel maker — the largest in Zimbabwe.
Clarifying the Cabinet position, Industry and Commerce minister Welshman Ncube said “such big companies might be too powerful to control” and could “kill competition”.
His deputy Mike Bimha on Tuesday announced that government had decided to sell 60% of its 90% equity interest in Zisco to Essar because it had agreed to assume government’s share of the parastatal’s debt, estimated at about $240 million.
Essar is buying the stake through its Mauritian subsidiary, Essar Holdings.
Bimha said the transaction is expected before the end of the year, paving the way for the revival of Zisco.
“The issue of the $240 million debt was part of the criteria used in terms of selecting the final winner,” Bimha said.
“The winner is willing to take over the debt without government taking any liabilities. The issue of capital is being looked at and we are not in a position to disclose the figure now. We will be engaging in discussions soon.”
Zisco, with capacity to produce one million tonnes of steel per year, is currently reeling under sanctions, debts, working capital and aging equipment.
Its total debt stock is estimated at about $300 million.
The Redcliff-based company has distribution centres in Bulawayo, Kwekwe and Harare and derives raw materials security from its subsidiary Buchwa Iron Mining Company in Shurugwi.
Its would-be partner, Essar Holdings, is a multinational conglomerate with vast operations in Africa, including oil and gas assets in Nigeria, Kenya and Madagscar, telecom assets in East Africa, BPO operations in South Africa and coal concessions in Mozambique.
It operates in more than 20 countries across five continents.