After over a year of not getting their salaries, an Indian company has brought some cheer on that front to nearly 1,700 workers of the Zimbabwe Iron and Steel Company (ZISCO).
Having acquired a controlling stake in ZISCO in March, Essar Africa Holdings Ltd (EAHL) has begun the revival process by paying salaries to employees of the defunct African steel-maker.
Employees have been given their salaries ranging from $350 for the lowest paid employee to $1,200 for the highest paid employee, said a spokesperson for the Essar Group.
The company bought a controlling stake in ZISCO after the Zimbabwean Government sanctioned the deal. With the Government not having the funds to revive operations and pay hundreds of millions in debt that had piled up, salaries of employees were put on hold for over a year at the former state-controlled enterprise, Essar Group officials added.
The move is being seen as the first step to revive ZISCO, an integrated steel company with a rated capacity of one million tonnes for the manufacture of long products. The company also owns iron ore and limestone mining rights and other claims, which require significant investment in exploration and development.
The Essar Group acquired majority stake in the company eyeing a lucrative market in Africa whose steel demands are growing.
“We believe that the new venture will be well positioned to be a low-cost steel producer to capitalise on the forecasted growth in sub-Saharan Africa,” said Mr Firdhose Coovadia, Resident Director, Essar (Middle East & Africa) and Director, EAHL.
But it has been non-operational for several years due to lack of funds for working capital and maintenance of plant and equipment, irregular supply of power and other critical raw materials. Funding was required to revive the company which is coming in from Essar.
After paying the employees of the main company, Essar management also visited the subsidiary company of ZISCO, Lancashire Steel in Zimbabwe.
Essar is also preparing to pay the 700 employees of Lancashire Steel their outstanding dues and salaries to kick start the revival process.