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Woes mount for Essar

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Ziscosteel major creditors KFW of Germany and Sino Sure of China are demanding their dues amid concerns over delays in concluding its takeover by Essar Africa Holdings.

Under the terms of the $750 million deal between the India-based firm and the government, Essar, which acquired 54% of the State-owned entity, agreed to settle the now defunct Ziscosteel’s debts.

Industry and Commerce minister Welshman Ncube yesterday told a Parliamentary Portfolio Committee on Industry and Commerce that as part of the deal, Essar assumed Zisco’s debts totalling $400 million as of last year.

Ncube said the debts have since increased through punitive interests accrued from non-payment.

“They (Essar) have been in negotiation with both KFW of Germany as well as Sino Sure to pay those debts. They had substantially reached an agreement. I know that the Germans are now also concerned with the delays. The debt with Sino Sure is a little more difficult in that Sino Sure has not been co-operative in working with Essar. They have basically said ‘let Essar pay you (government) and you pay us’. Essar are prepared to pay in any other way so we don’t see any problems,” he said.

Ncube said the transfer of Mwenezi claims, which was finalised by Cabinet last Tuesday, had been delaying the implementation of the deal, barely a year after it was signed. He said a former Ziscosteel employee Rodrick Mumbire was claiming ownership of some of the iron ore claims at Mwenezi.

“It was agreed that we will transfer Buchwa, Ripple Creek and 20 claims in Mwenezi that are not in dispute to NewZim Steel. We will wait for the Supreme Court ruling on who is entitled to the other claims that Mumbire has,” Ncube said.

“If the court says the claims belong to Mumbire, we will give them to him. We don’t believe the Supreme Court will so rule.”

Ncube said his ministry was waiting for the Mines and Mining Development ministry to expedite the transfer of claims following the Cabinet decision last week.

“I think we have resolved the major stumbling block. I am pushing that everything be done by the last day of this month,” he said.

Ncube said his ministry has been communicating with the Mines ministry since June 2011 daily and the major issue has been on the transfer of claims. He said the ministries of Water, Energy, Investment and finance expeditiously carried out their mandate in the deal.

Ziscosteel had three iron ore blocks including Buchwa Mine that had been its traditional source of iron ore with 30 million tonnes, Mwenezi and Ripple Creek. Despite Essar being non-operational since last year, the firm has paid $32 million in salaries.

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