The government and Essar Africa Holdings Limited (EAHL) on Wednesday launched two entities: New Zim Steel (NZS) Private Limited and New Zim Minerals Private Limited bringing to closure the transaction process that began in August 2010 with a public tender for a majority stake of government shareholding in Ziscosteel.
The launch begins a new chapter for the country and particularly for the communities in and around Redcliff and Chivhu.
Below are excerpts of what Essar plans to do to revive the steel plant.
New Zim Steel
Subject to the conclusion of discussions with minority shareholders, NZS will be owned 40% by government and 60% by EAHL. This company will acquire the existing assets of Zisco and will revive and expand Zisco’s steel-making capacity in two phases:
l Refurbishment of the plant at an investment of $115 million to be completed in 12-18 months and is expected to deliver a production capacity of 0,5 million tonnes per annum (mtpa).
l Increase production capacity to 1,2mtpa, including investment in a Greenfield multi-fuel cogeneration power plant of 50MW and an oxygen plant at an incremental investment of $275 million. This is scheduled to be completed within three years.
NZS plans to increase the capacity of the plant to 2,5mtpa in the longterm.
EAHL plans to invest in the energy sector through investment in Munyati Power Station as well as in the country’s water infrastructure and upgrading of rail infrastructure.
New Zim Minerals
Subject to the conclusion of discussions with minority shareholders, NZM will be owned 20% by the GoZ and 80% by EAHL. NZM will acquire 100% stake in Buchwa Iron Mining Company (Bimco) from Zisco and will be tasked with the exploration and development of Zisco’s mining assets including the Ripple Creek Iron Ore Mine in Redcliff, its limestone deposits and the Mwanesi Iron Ore Deposit.
The iron ore at Ripple Creek will be mined to feed NZS’ steel plant requirements in the short term.
EAHL will fund NZM for a full testing programme to establish the quantity and quality of the ore, including its beneficiation properties and the latest technologies which can be used for such beneficiation.
It is estimated this exploration, technology assessment and testing programme will entail an investment of approximately $100 million in the first 18 months.
Thereafter, depending on the outcome of the techno-economic feasibility report for the project, EAHL will provide the funding required for the construction of a large-scale beneficiation project and related infrastructure which is estimated to be in the region of $3,5 billion.
The 20% equity stake of GoZ in NZM will be financed by EAHL and will represent an investment in a world-class asset that will benefit the people and the economy of Zimbabwe.
Ravi Ruia, vice chairman of Essar Group said: “This is a win-win transaction for both government and Essar. We view this union as a long term partnership with Zimbabwe and its people. We are committed to reviving Zimbabwe’s steel industry, adding value to both its natural and human resources and also improving the infrastructure of the country so as to make a significant contribution to the national economy.
“I am sure the success of this venture will attract further foreign direct investment in other sectors too.
“We have already committed to two funds of $5 million each towards a) entrepreneurship and youth development and (b) women empowerment and are working closely with the Government to implement the initiatives in the best interest of the people of Zimbabwe.”