The African nation declines to supply the resource; firm may have to renegotiate the terms of the contract
Tue, Oct 25 2011
The Essar Group’s quest for iron ore remains elusive with Zimbabwe declining to supply the resource as envisaged in a contentious deal between the Indian conglomerate and the African state.
The Essar Group may have to renegotiate the terms of the contract if it wants to continue with its plans in the African nation.
Zimbabwe won’t sell 90% of its iron ore resources to one company, mines and mining development deputy minister Gift Chimanikire said. He added that the provision in the current pact that allowed this was wrong.
“We have said to them (Essar): Do not expect us to hand over these resources. As government, we cannot just do that,” Chimanikire was quoted as saying by The Herald, a daily published by the Zimbabwean government.
An Essar Group spokesman said it was against company policy to comment on speculative reports.
“Essar continues to hold discussions with the Zimbabwe government over a number of issues relating to the Zisco (Zimbabwe Iron and Steel Co.) transaction, and we continue to make progress. However, we would not like to comment on any specific points,” the spokesman said.
Essar’s deal to gain access to a captive source of iron ore has been caught in political crossfire ever since it was signed in early August.
The Essar Group and Zimbabwe announced the launch of NewZim Steel Pvt. Ltd and NewZim Minerals Pvt. Ltd to revive Zisco, committing an $850 million investment by Essar Africa with the promise of job creation.
The shareholding structure in the two joint ventures was envisaged at 60:40 and 80:20, respectively.
Essar also committed to revive Zisco to its original capacity and unveiled a plan to double annual capacity to 2.5 million tonnes.
NewZim Minerals was to undertake exploration and technology assessment, with a testing programme commencing in the first 18 months. After this, depending on the outcome, it was to construct a large-scale beneficiation project and related infrastructure for an estimated expenditure of $3.5 billion.
Beneficiation is a process in which low-grade iron ore is upgraded to higher iron content through concentration and elimination of impurities.
Some members of Zimbabwe’s coalition government have questioned the deal, even as the strife-torn nation’s President Robert Mugabe has called for a general election in early 2012.
Industry and commerce minister Welshman Ncube led negotiations when the deal was signed.
Ncube is part of the Mutambara faction of the Movement for Democratic Change (MDC-M), which split in 2005 from the original Movement for Democratic Change, called MDC-T, headed by current Prime Minister Morgan Tsvangirai. Chimanikire belongs to MDC-T’s Tsvangirai faction.
Both factions of the MDC share an uneasy alliance with the Zanu-PF in the current coalition government.
Zimbabwe’s 87-year-old President Mugabe, the leader of the Zanu-PF party, has been ruling the country for three decades, but was forced to share power with political opponent Tsvangirai after the 2008 elections.
As no candidate received an outright majority in the first round of elections, a second was called, but Tsvangirai withdrew his candidature a week before this, citing violence against his party’s supporters.
Amid sustained international pressure, former South African president Thabo Mbeki brokered a power-sharing agreement with an arrangement, the so-called Global Political Agreement, for Mugabe to remain President while Tsvangirai was made Prime Minister.
“Resource nationalism is rising in many parts of the world where governments and other stakeholders believe that value has already been created once it’s known that resources exist, but that is a misplaced notion,” said Anjani Agrawal, national leader for mining and metals sector at global consultancy Ernst and Young.
Resource nationalism refers to the recent trend of governments across the world targeting the metals and mining sector to increase revenue in the face of commodity deficits and the consequent rise in prices.
Essar Africa Holdings Ltd, a group company incorporated in Mauritius, emerged as the preferred bidder for Zisco and the iron ore resources that it owned beating the world’s largest steel maker by capacity, ArcelorMittal, and the Naveen Jindal-headed Jindal Steel and Power Ltd.
keyword- Essar Group, Zisco, imbabwe
sourced livemint
Showing posts with label Government of Zimbabwe. Show all posts
Showing posts with label Government of Zimbabwe. Show all posts
Tuesday, October 25, 2011
Friday, October 21, 2011
Zimbabwe Seeks to Reopen Talks With Essar Africa Over Iron Ore Holdings
Deputy Mines Minister Gift Chimanikire said Zimbabwe is in talks with Essar Africa to claw back rights to iron ore reserves granted to the new strategic partner under the US$750 million deal.
Fri, Oct21, 2011
Zimbabwean Deputy Mines Minister Gift Chimanikire says the government wants to reopen negotiations on a deal it made with Essar Africa Holdings of India to relaunch the Zimbabwe Iron and Steel Company, now called New Zimbabwe Steel Limited.
Chimanikire said Zimbabwe is in talks with Essar to claw back rights to iron ore reserves granted to Essar under the US$750 million deal. The mineral rights are held by New Zimbabwe Minerals, a subsidiary of the relaunched national steel company.
The deputy minister said Essar is extracting iron ore and preparations to refurbish the Redcliff steel plant are at an advanced stage. Neither Industry Minister Welshman Ncube, who negotiated the deal, nor Essar management, could be reached for comment.
Chimanikire said he hopes the new talks won’t derail the revival of the long-moribund steel maker. “Our concern is that Ncube did not consult the Ministry of Mines when they parceled out huge iron ore deposits to Essar,” Chimanikire said.
Economic commentator Bekithemba Mhlanga said the government should not have signed the agreement with Essar without carefully scrutinizing its terms.
(sourced voanews.com)
Fri, Oct21, 2011
Zimbabwean Deputy Mines Minister Gift Chimanikire says the government wants to reopen negotiations on a deal it made with Essar Africa Holdings of India to relaunch the Zimbabwe Iron and Steel Company, now called New Zimbabwe Steel Limited.
Chimanikire said Zimbabwe is in talks with Essar to claw back rights to iron ore reserves granted to Essar under the US$750 million deal. The mineral rights are held by New Zimbabwe Minerals, a subsidiary of the relaunched national steel company.
The deputy minister said Essar is extracting iron ore and preparations to refurbish the Redcliff steel plant are at an advanced stage. Neither Industry Minister Welshman Ncube, who negotiated the deal, nor Essar management, could be reached for comment.
Chimanikire said he hopes the new talks won’t derail the revival of the long-moribund steel maker. “Our concern is that Ncube did not consult the Ministry of Mines when they parceled out huge iron ore deposits to Essar,” Chimanikire said.
Economic commentator Bekithemba Mhlanga said the government should not have signed the agreement with Essar without carefully scrutinizing its terms.
(sourced voanews.com)
Wednesday, September 7, 2011
South Africa mining sector two biggest risks
Wednesday, 07 Sep 2011
Many governments are looking at ways to get more money from miners as companies report record profits. The higher the returns and the higher the profits, the greedier governments become. As commodity prices rise governments try to boost their share of the proceeds from their countries energy and mining sectors.
Country risk
Where the political and economic stability of the host country is questionable and abrupt changes in the business environment could adversely affect profits or the value of the company’s assets.
Resource nationalism
The tendency of people and governments to assert control, for strategic and economic reasons, over natural resources located on their territory.
The major benefit for developing countries from natural resource development comes in the form of:
1. Employment/wages
2. Government revenues - taxes, royalties or dividends
There can also be indirect benefits such as knowledge and technology transfers. Foreign investments can also involve infrastructure investments, sometimes on a massive scale, like electricity, water supplies, roads, railways, bridges and ports.
The PricewaterhouseCoopers Mine 2011 survey highlights what governments across the globe are looking at in regards to the world’s top 40 miners:
1. Achieved net profits of USD 110 billion last year
2. Halved their debt
3. Built cash reserves of USD 105 billion
4. Announced capital programs of USD 300 billion for 2011
In 2011, resource nationalism became the number one risk for mining companies.
Miners are an easy target as mining is a long term investment and one that is especially capital intensive mines are also immobile, so miners are at the mercy of the countries in which they operate. Outright seizure of assets happens using the twin excuses of historical injustice and environmental/contractual misdeeds. There is no compensation offered and no recourse.
Mr Mike Elliott Ernst & Young Global Mining & Metals Leader said that “Resource nationalism is taking other forms as well, including greater controls on foreign participation, mandated beneficiation, use it or lose it demands and mandated government participation.”
The result is a spate of recent news regarding resource nationalism:
1. A government backed ouster of Brazilian mining giant Vale SA’s CEO, Roger Agnelli. Brazil’s government is considering a proposal that would make it easier to raise or lower mining royalties depending on economic conditions and minerals prices as part of a broad overhaul in Brazil’s mining sector which includes revamping the licensing process and boosting state income from mining companies.
2. Panamarecently repealed part of its mining code allowing investments from foreign governments.
3. A handful of African countries have also increased tax revenue from miners in recent years ie Ghana plans to double royalties on mining to increase government revenues.
4. South Africa is pushing to nationalize its mines and banks. The Youth League wants the government to take 60% of private mining assets without compensation to distribute wealth and create jobs. As part of an empowerment driveSouth Africa’s mining charter already calls for 26% of the mining industry in Africa’s largest economy to be transferred to black owners by 2014.
5. Papua New Guinea introduced a plan to hand state ownership of mineral and energy resources to landowners a move that may prove disastrous to foreign miners and their shareholders.
6. President Hugo Chavez nationalized Venezuela’s gold industry.
7. Peruvian president Humala (recently elected) promised, during his election campaign, to initiate windfall taxes on mine profits and to harden tax and royalty regimes.
8. AustraliaandChileare proposing fresh tax or royalty regimes.
9. In the past 12 to 18 months at least 25 countries have increased or announced intentions to increase their government take from resources via taxes or royalties.
10. Zimbabwenow requires foreign owned companies indigenize their operations in the country by transferring at least 51% ownership to locals. Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere rejected a number of foreign companies plans and set a 14 day ultimatum for the submission of what he considers acceptable plans.
Mr Scott Jobin-Bevans president of Prospectors and Developers Association of Canada said that “We know it’s tempting, at a time when government debt is mounting and metal prices are rising, for some governments to try to grab an even higher proportion of the revenue from mining. But we urge governments to remember that the cumulative effect of these unreasonable tax hikes will be to push up world prices and slow global growth.”
(sourced from Resource Investor)
Many governments are looking at ways to get more money from miners as companies report record profits. The higher the returns and the higher the profits, the greedier governments become. As commodity prices rise governments try to boost their share of the proceeds from their countries energy and mining sectors.
Country risk
Where the political and economic stability of the host country is questionable and abrupt changes in the business environment could adversely affect profits or the value of the company’s assets.
Resource nationalism
The tendency of people and governments to assert control, for strategic and economic reasons, over natural resources located on their territory.
The major benefit for developing countries from natural resource development comes in the form of:
1. Employment/wages
2. Government revenues - taxes, royalties or dividends
There can also be indirect benefits such as knowledge and technology transfers. Foreign investments can also involve infrastructure investments, sometimes on a massive scale, like electricity, water supplies, roads, railways, bridges and ports.
The PricewaterhouseCoopers Mine 2011 survey highlights what governments across the globe are looking at in regards to the world’s top 40 miners:
1. Achieved net profits of USD 110 billion last year
2. Halved their debt
3. Built cash reserves of USD 105 billion
4. Announced capital programs of USD 300 billion for 2011
In 2011, resource nationalism became the number one risk for mining companies.
Miners are an easy target as mining is a long term investment and one that is especially capital intensive mines are also immobile, so miners are at the mercy of the countries in which they operate. Outright seizure of assets happens using the twin excuses of historical injustice and environmental/contractual misdeeds. There is no compensation offered and no recourse.
Mr Mike Elliott Ernst & Young Global Mining & Metals Leader said that “Resource nationalism is taking other forms as well, including greater controls on foreign participation, mandated beneficiation, use it or lose it demands and mandated government participation.”
The result is a spate of recent news regarding resource nationalism:
1. A government backed ouster of Brazilian mining giant Vale SA’s CEO, Roger Agnelli. Brazil’s government is considering a proposal that would make it easier to raise or lower mining royalties depending on economic conditions and minerals prices as part of a broad overhaul in Brazil’s mining sector which includes revamping the licensing process and boosting state income from mining companies.
2. Panamarecently repealed part of its mining code allowing investments from foreign governments.
3. A handful of African countries have also increased tax revenue from miners in recent years ie Ghana plans to double royalties on mining to increase government revenues.
4. South Africa is pushing to nationalize its mines and banks. The Youth League wants the government to take 60% of private mining assets without compensation to distribute wealth and create jobs. As part of an empowerment driveSouth Africa’s mining charter already calls for 26% of the mining industry in Africa’s largest economy to be transferred to black owners by 2014.
5. Papua New Guinea introduced a plan to hand state ownership of mineral and energy resources to landowners a move that may prove disastrous to foreign miners and their shareholders.
6. President Hugo Chavez nationalized Venezuela’s gold industry.
7. Peruvian president Humala (recently elected) promised, during his election campaign, to initiate windfall taxes on mine profits and to harden tax and royalty regimes.
8. AustraliaandChileare proposing fresh tax or royalty regimes.
9. In the past 12 to 18 months at least 25 countries have increased or announced intentions to increase their government take from resources via taxes or royalties.
10. Zimbabwenow requires foreign owned companies indigenize their operations in the country by transferring at least 51% ownership to locals. Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere rejected a number of foreign companies plans and set a 14 day ultimatum for the submission of what he considers acceptable plans.
Mr Scott Jobin-Bevans president of Prospectors and Developers Association of Canada said that “We know it’s tempting, at a time when government debt is mounting and metal prices are rising, for some governments to try to grab an even higher proportion of the revenue from mining. But we urge governments to remember that the cumulative effect of these unreasonable tax hikes will be to push up world prices and slow global growth.”
(sourced from Resource Investor)
Tuesday, August 23, 2011
Zimbabwe government gives foreign companies 14 day deadline
Tuesday, 23 Aug 2011
Reuters reported that Zimbabwe’s government has given foreign companies including miners and banks a 14 day ultimatum to submit plans on how they propose to transfer majority stakes to local owners or risk losing permits.
However, immediately thereafter the country’s central bank governor Mr Gideon Gono launched a scathing attack on the minister responsible for the indigenization policy saying the threats could irreparably harm the nerve centre of the recovering economy.
Before a new unity government in 2009 Zimbabwe economy had shrank by as much as half over the preceding decade amid hyperinflation, property seizures and civil unrest. The country is the number two platinum producer in the world and rich in gold and diamonds.
Mr Gono’s comments is a clear sign of the divisions that still exists within the unity government between the opposition MDC and President Robert Mugabe who has been leader of the country for more than 30 years and championed the legislation which was enacted in 2008.
Under Zimbabwe’s indigenization policy mining companies were granted until the beginning of June to submit proposals about transferring majority ownership but the government then rejected 175 of these plans from mines because they had proposed selling only a 25% stake and making social responsibility investments to obtain credits for the remainder.
The targeted firms include platinum miners Zimplats, which is majority owned by Impala Platinum (Implats), and Mimosa, an Implats' 50:50 joint venture with Aquarius Platinum.
Others include Rio Tinto's Murowa diamond mine, British American Tobacco and local units of British banks, Standard Chartered and Barclays.
Indigenisation and Empowerment Minister Saviour Kasukuwere wrote to the companies on July 28, informing them they had failed to provide acceptable details of how they propose to transfer 51 percent shareholdings to local people within the five years stipulated by law, the state controlled Herald newspaper said.
The newspaper reported that the companies risk losing their operating licences if they do not submit plans on transfer of ownership that are deemed acceptable.
(sourced from Reuters)
Reuters reported that Zimbabwe’s government has given foreign companies including miners and banks a 14 day ultimatum to submit plans on how they propose to transfer majority stakes to local owners or risk losing permits.
However, immediately thereafter the country’s central bank governor Mr Gideon Gono launched a scathing attack on the minister responsible for the indigenization policy saying the threats could irreparably harm the nerve centre of the recovering economy.
Before a new unity government in 2009 Zimbabwe economy had shrank by as much as half over the preceding decade amid hyperinflation, property seizures and civil unrest. The country is the number two platinum producer in the world and rich in gold and diamonds.
Mr Gono’s comments is a clear sign of the divisions that still exists within the unity government between the opposition MDC and President Robert Mugabe who has been leader of the country for more than 30 years and championed the legislation which was enacted in 2008.
Under Zimbabwe’s indigenization policy mining companies were granted until the beginning of June to submit proposals about transferring majority ownership but the government then rejected 175 of these plans from mines because they had proposed selling only a 25% stake and making social responsibility investments to obtain credits for the remainder.
The targeted firms include platinum miners Zimplats, which is majority owned by Impala Platinum (Implats), and Mimosa, an Implats' 50:50 joint venture with Aquarius Platinum.
Others include Rio Tinto's Murowa diamond mine, British American Tobacco and local units of British banks, Standard Chartered and Barclays.
Indigenisation and Empowerment Minister Saviour Kasukuwere wrote to the companies on July 28, informing them they had failed to provide acceptable details of how they propose to transfer 51 percent shareholdings to local people within the five years stipulated by law, the state controlled Herald newspaper said.
The newspaper reported that the companies risk losing their operating licences if they do not submit plans on transfer of ownership that are deemed acceptable.
(sourced from Reuters)
Saturday, August 6, 2011
Essar Group to invest up to $4 billion in iron ore project in Zimbabwe
Zimbabwean Industry Minister Welshman Ncube has announced that India-based conglomerate Essar Group plans to invest $2-4 billion to build an iron ore dressing plant in Mwenezi in the south of Zimbabwe.
Minister Ncube said Essar's investment would be the biggest witnessed in the local mining industry in the past 10 years.
Last month Essar acquired local Zimbabwean iron ore and steel company Parastatal Ziscosteel. This company was one of the largest iron ore producers in Africa before going bankrupt three years ago. It reopened on August 3 with its new name New Zimbabwe Steel, and its annual steel output is expected to reach 2.5 million mt.
(sourced steeloribs)
Monday, March 28, 2011
Mugabe Vows to Force Foreign Miners to Sell Stakes in Zimbabwe
March 28, 2011, 6:45 AM EDT
By Nelson Gore Banya and Brian Latham
March 28 - Zimbabwe’s government will make sure foreign companies are “junior partners” in the country, President Robert Mugabe said, after the state published regulations to take 51 percent of mines.
“We are taking back our country,” Mugabe said yesterday in the capital, Harare. “Listen, Britain and America, this is our country. If you have companies which would want to work in our mining sector, they are welcome to come and join us, but we must have our people as the major shareholders.”
Anglo American Plc and Rio Tinto Plc “must transform and become Zimbabwean,” the 87-year-old Mugabe said.
The government, in a March 25 decree, ordered foreign miners to explain within 45 days how they will cede 51 percent of their local assets to “indigenous” Zimbabweans. The companies have six months to sell the stake, according to the decree. The regulations are in line with the Indigenization and Economic Empowerment Act, first signed into law three years ago. The country has the world’s second-biggest platinum and chrome reserves after South Africa.
“It’s another dimension to the struggle,” Mugabe said. “Let that lesson go deep.” Investors should “come as friends, not as masters and superiors,” he said.
Aquarius Platinum Ltd., which owns a stake in a mine in the southern African nation, fell the most in eight months in London trading after it published a statement on the regulations. The Perth, Australia-based company said March 25 that its Mimosa Mining Co. unit is in discussions with the Zimbabwean authorities to find out how to comply with the law and is “confident it will be in a strong position to meet the requirements.”
No Commitment
Aquarius dropped as much as 7.5 percent to 342.4 pence, the biggest decline since July 19, and traded at 349.6 pence as of 11:35 a.m. in London. The shares dropped 6.1 percent in Johannesburg.
Calls by Bloomberg News to Rio Tinto’s Harare unit today to seek comment weren’t immediately answered. The company declined to comment when its London headquarters was called by phone March 25.
It’s unclear whether companies will get a market price, or any payment, for the shares they are forced to sell, Harare- based independent economist John Robertson said in an e-mailed statement today.
“Non-payment for what is being purchased would normally be considered very good cause for not parting with the asset, but it appears that government has no intention of offering the mining companies the right to cancel the sale of their shares on such grounds,” Robertson said.
“The much more serious longer-term effect of these regulations will be the almost complete arrest of new mining investment inflows,” he said.
Mugabe’s Zimbabwe African National Union-Patriotic Front is in a power-sharing government with the Movement for Democratic Change, led by Prime Minister Morgan Tsvangirai. The law doesn’t allow for expropriation or nationalization, Tsvangirai said on March 8. (By Bloomberg)
“We are taking back our country,” Mugabe said yesterday in the capital, Harare. “Listen, Britain and America, this is our country. If you have companies which would want to work in our mining sector, they are welcome to come and join us, but we must have our people as the major shareholders.”
Anglo American Plc and Rio Tinto Plc “must transform and become Zimbabwean,” the 87-year-old Mugabe said.
The government, in a March 25 decree, ordered foreign miners to explain within 45 days how they will cede 51 percent of their local assets to “indigenous” Zimbabweans. The companies have six months to sell the stake, according to the decree. The regulations are in line with the Indigenization and Economic Empowerment Act, first signed into law three years ago. The country has the world’s second-biggest platinum and chrome reserves after South Africa.
“It’s another dimension to the struggle,” Mugabe said. “Let that lesson go deep.” Investors should “come as friends, not as masters and superiors,” he said.
Aquarius Platinum Ltd., which owns a stake in a mine in the southern African nation, fell the most in eight months in London trading after it published a statement on the regulations. The Perth, Australia-based company said March 25 that its Mimosa Mining Co. unit is in discussions with the Zimbabwean authorities to find out how to comply with the law and is “confident it will be in a strong position to meet the requirements.”
No Commitment
Aquarius dropped as much as 7.5 percent to 342.4 pence, the biggest decline since July 19, and traded at 349.6 pence as of 11:35 a.m. in London. The shares dropped 6.1 percent in Johannesburg.
Calls by Bloomberg News to Rio Tinto’s Harare unit today to seek comment weren’t immediately answered. The company declined to comment when its London headquarters was called by phone March 25.
It’s unclear whether companies will get a market price, or any payment, for the shares they are forced to sell, Harare- based independent economist John Robertson said in an e-mailed statement today.
“Non-payment for what is being purchased would normally be considered very good cause for not parting with the asset, but it appears that government has no intention of offering the mining companies the right to cancel the sale of their shares on such grounds,” Robertson said.
“The much more serious longer-term effect of these regulations will be the almost complete arrest of new mining investment inflows,” he said.
Mugabe’s Zimbabwe African National Union-Patriotic Front is in a power-sharing government with the Movement for Democratic Change, led by Prime Minister Morgan Tsvangirai. The law doesn’t allow for expropriation or nationalization, Tsvangirai said on March 8. (By Bloomberg)
Thursday, March 10, 2011
Essar in pact to revive Zimbabwe Iron and Steel Company
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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