HomeNewsLegal battles haunt Essar deal

Legal battles haunt Essar deal


The $750 million Essar Africa deal for the takeover of Ziscosteel that is in limbo cannot be fully consummated because of legal challenges over the iron ore mining claims that are supposed to be transferred to the mining giant.

The deal, which was sealed in March last year, resulted in Ziscoteel being disbanded into two companies, NewZim Steel and NewZim Minerals.

Essar acquired 60% in NewZim Steel and it was also agreed that the Indian giant would acquire 80% of iron ore mining unit Buchwa Iron Mining Company (Bimco).

Bimco held the rights to iron ore claims for supply to Ziscosteel.

NewsDay is reliably informed that there are several cases before the courts of individuals and companies associated with businessman Mutumwa Mawere who are claiming ownership of the claims, among them Rodreck Mumbire.

The latest case to spill into the courts involves Bimco and Mumbire.

The claims in dispute are cited as Leleza 1-15 registration no 12896 BM-12910BM and Berlena 1-15, registration numbers 12896 BM – 12895 BM.
Initially, Mumbire sought an order to have the iron ore claims transferred by the Gweru commissioner of mines and the order was subsequently granted in June last year.

However, in its heads of arguments filed at the High Court, Bimco is seeking a final order declaring the claims were improperly registered as Mumbires.

Mumbire, Gweru commissioner of mines, Bearable Prospects Investments and the chief mining commissioner were cited as first, second, third and fourth respondents respectively.

In his heads of argument, Mumbire said Buchwa had no right to seek the reversal of the allocation more than two years after the claims were pegged.

The claims are thus protected by the provisions of section 58 of the Mines and Minerals Act from any such challenge, he said.

Mumbire said even if the courts were to consider otherwise, the application was still doomed to fail.

As part of a strategy to resolve the transfer of iron ore claims to Essar, informed sources said the Mines and Mining Development ministry had set in motion a process to validate the claims that should be transferred to NewZim Minerals.

The government continues to assure Essar on the deal and they welcome the transaction.

However, the ministry of Mines in particular feels that it needs to do more work on assessing the extent and validity of the mining claims to be transferred to NewZim Minerals, sources said.

They (ministry of mines) will be working towards a solution in the next four weeks.

This is a transaction driven by a line ministry (Industry and Commerce) and the Ministry of Mines entered the process late.

Essar has since expressed frustration as it has failed to commence operations more than a year after the deal was inked and has threatened to withdraw in protest over the governments failure to guarantee adequate iron ore supplies.

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