ESSAR Africa Holdings has begun operations at Zisco and is engaging creditors to work on a repayment plan while it waits for the construction of a new iron and steel plant in 24 months, Industry and Commerce minister Mike Bimha said yesterday.
Lancashire Steel is expected to be operational within six months after the importation of steel billets to generate revenue while the construction of the 500 000-tonnes steel plant takes place, Bimha told the portfolio committee on Industry and Commerce.
The new 500 000-tonne steel plant would be completed in two years at a cost of $650 million.
“I am glad to report that when the vice-chairman of Essar came to Zimbabwe it was agreed that we can now start the operationalisation. They have engaged those creditors and government no longer has problems of garnishing,” Bimha said.
“They are already in discussions. I think very soon officials from the Ministry of Finance and Essar will be going to meet some of those creditors so that they agree on the repayment plan.”
He said Essar has revised the initial plan with government to rehabilitate the iron and steel-producing plant by building 80% of the plant meaning that there will be construction before production within 24 months.
“The blast furnace which is really the core, they cannot rehabilitate it. They have to put up a new one. The good thing is that they are going to work on the foundation of what is there. The good thing is that the time frame is still the same within a period of 24 months,” he said.
He added that there was likely to be production of the first tonnage of liquid steel in the next 24 months.
He, however, said while waiting for the reconstruction process to take place, the company would import steel billets that would then be channelled to Lancashire Steel, a subsidiary of NewZimSteel expected to resume operations in the next six months.
Bimha said this would ensure employees were utilised while the company generated income. Chinese and Indian contractors have been engaged to work on the plant, Bimha said.
He said Essar had conducted a staff audit to see what the staff could do during the period of dismantling and constructing a new plant.
In 2010, Essar Africa Holdings agreed to buy 54% in Zimbabwe Iron and Steel Company (Zisco), with the government keeping 36% and 10% owned by minority investors.
The Zisco-Essar deal was touted as the biggest deal during the inclusive government.
However, the deal ran into problems after government refused to transfer the mineral rights to NewZim Minerals — the result of bickering among coalition government partners on how the deal would be finalised amid reports that parties wanted to use the transaction as a campaign tool for last year’s elections.
Government finally agreed to transfer the claims in May this year.