March 10, 2011 By NetIndian News Network
Mumbai: Essar Africa Holdings Limited (EAHL), a part of the Essar Group, today said it had signed an agreement with the Government of Zimbabwe (GoZ) for the revival of the operational assets of Zimbabwe Iron and Steel Company (ZISCO).
A press release from the company said the agreement marked an important milestone in the process which started with the public tender for a majority of the Zimbabwean government's shareholding in ZISCO and begins a new chapter for the economic growth of that country.
The release said EAHL and GoZ would set up two joint venture (JV) companies that shall acquire all the steel and mining related assets and liabilities of ZISCO and its subsidiaries.
Further, EAHL will release GoZ from its guaranteed obligations under the ZISCO debt, the release said.
It said the steel JV would be owned 60/40 and the minerals JV owned 80/20 by Essar and GoZ, respectively.
The transaction will close in due course upon facilitation of various approvals, including approvals from the enabling ministries and an acceptable settlement of the GoZ guaranteed debt obligations of ZISCO.
Upon closing, EAHL and GoZ will also finalize and settle liabilities such as unpaid wages and salaries and amounts due to various local creditors and so on, the release said.
"We believe that this transaction will serve as a catalyst for significant future foreign direct investment into Zimbabwe," he said.
ZISCO is an integrated steel company with a rated capacity of one million tonnes for the manufacture of long products. It has been non-operational for the last few years due to shortage of funds for working capital and maintenance of plant and equipment, irregular supply of power and other critical raw materials and infrastructure. ZISCO also owns iron ore and limestone mining rights and other claims, which require significant investment in exploration and development.
Firdhose Coovadia, Resident Director, Essar (Middle East & Africa) and Director, EAHL said: "We believe that the new ventures will be well positioned to be a low-cost steel producer that can meet the growing demands of the regional steel market and capitalize on the forecasted growth in sub Saharan Africa. We also recognize ZISCO as a vital and strategic asset for the Zimbabwean economy and Essar looks forward to making a meaningful contribution to the future development of Zimbabwe and its people.The revival of ZISCO represents a challenging task that will require the co-operation of various parties, and entail significant capital expenditure."
He said the Essar Group had a track record of successfully commissioning and operating greenfield and brownfield steel plants in different parts of the world including India, Canada, UK and Indonesia.
Mr Coovadia said the Group would bring in investments and expertise in steelmaking, beneficiation, project management, construction, power generation and logistics.
"We believe that the Essar Group is a good partner for the revival of ZISCO’s assets. With the entry of EAHL as a partner, the various stakeholders of ZISCO, especially the employees will stand to benefit significantly," Mr Nyasha Makuvise, Chairman of the Board of ZISCO, said.
Mr V. Ashok, Indian Ambassador in Zimbabwe commented: "This is an important milestone in the long-standing and fruitful relationship between India and Zimbabwe which dates back to the independence movement in Zimbabwe, and we believe that this partnership will further bring the people of India and Zimbabwe closer."
Essar Group’s current operations in Africa include oil and gas assets in Nigeria, Kenya and Madagascar, telecom assets in East Africa, BPO operations in South Africa and coal concessions in Mozambique.
Tags : iron ore and limestone mining rights, exploration and development, steel mills, raw material, coal, Zimbabwe Iron and Steel Company, ZISCO, steel joint venture, FDI
A press release from the company said the agreement marked an important milestone in the process which started with the public tender for a majority of the Zimbabwean government's shareholding in ZISCO and begins a new chapter for the economic growth of that country.
The release said EAHL and GoZ would set up two joint venture (JV) companies that shall acquire all the steel and mining related assets and liabilities of ZISCO and its subsidiaries.
Further, EAHL will release GoZ from its guaranteed obligations under the ZISCO debt, the release said.
It said the steel JV would be owned 60/40 and the minerals JV owned 80/20 by Essar and GoZ, respectively.
The transaction will close in due course upon facilitation of various approvals, including approvals from the enabling ministries and an acceptable settlement of the GoZ guaranteed debt obligations of ZISCO.
Upon closing, EAHL and GoZ will also finalize and settle liabilities such as unpaid wages and salaries and amounts due to various local creditors and so on, the release said.
"We believe that this transaction will serve as a catalyst for significant future foreign direct investment into Zimbabwe," he said.
ZISCO is an integrated steel company with a rated capacity of one million tonnes for the manufacture of long products. It has been non-operational for the last few years due to shortage of funds for working capital and maintenance of plant and equipment, irregular supply of power and other critical raw materials and infrastructure. ZISCO also owns iron ore and limestone mining rights and other claims, which require significant investment in exploration and development.
Firdhose Coovadia, Resident Director, Essar (Middle East & Africa) and Director, EAHL said: "We believe that the new ventures will be well positioned to be a low-cost steel producer that can meet the growing demands of the regional steel market and capitalize on the forecasted growth in sub Saharan Africa. We also recognize ZISCO as a vital and strategic asset for the Zimbabwean economy and Essar looks forward to making a meaningful contribution to the future development of Zimbabwe and its people.The revival of ZISCO represents a challenging task that will require the co-operation of various parties, and entail significant capital expenditure."
He said the Essar Group had a track record of successfully commissioning and operating greenfield and brownfield steel plants in different parts of the world including India, Canada, UK and Indonesia.
Mr Coovadia said the Group would bring in investments and expertise in steelmaking, beneficiation, project management, construction, power generation and logistics.
"We believe that the Essar Group is a good partner for the revival of ZISCO’s assets. With the entry of EAHL as a partner, the various stakeholders of ZISCO, especially the employees will stand to benefit significantly," Mr Nyasha Makuvise, Chairman of the Board of ZISCO, said.
Mr V. Ashok, Indian Ambassador in Zimbabwe commented: "This is an important milestone in the long-standing and fruitful relationship between India and Zimbabwe which dates back to the independence movement in Zimbabwe, and we believe that this partnership will further bring the people of India and Zimbabwe closer."
Essar Group’s current operations in Africa include oil and gas assets in Nigeria, Kenya and Madagascar, telecom assets in East Africa, BPO operations in South Africa and coal concessions in Mozambique.
Tags : iron ore and limestone mining rights, exploration and development, steel mills, raw material, coal, Zimbabwe Iron and Steel Company, ZISCO, steel joint venture, FDI
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