Essar Africa Holding, a privately held company of the Essar Group, has taken over day-to-day management control at Zimbabwe Iron and Steel Company (Zisco) on Friday. The company was acquired by Essar in March from the Zimbabwe Government through a joint venture company NewZim Steel in which Essar held 60 per cent and the Zimbabwe Government owned the rest.
To start with, Essar will invest $115 million (about Rs 575 crore) in 12-18 months to refurbish the plant and achieve a production capacity of 0.5 million tonnes per annum (mtpa). In the second phase, the production capacity will be enhanced to 1.2 mtpa with a co-generation power plant of 50 MW and oxygen plant at an incremental investment of $275 million (about Rs 1,375 crore). This is scheduled to be completed within three years, said a press release issued by Essar on Friday.
MINING ASSET
The mining assets owned by Zisco will be transferred to a new company NewZim Minerals, which will be owned 20 per cent by the Zimbabwe Government and 80 per cent by Essar Africa Holdings.
NZM will acquire 100 per cent stake in BIMCO (Buchwa Iron Mining Company) from Zisco and will be tasked with the exploration and development of mining assets including the Ripple Creek Iron Ore Mine in Redcliff, limestone deposits and the Mwanesi Iron Ore Deposit, said the release.
The priority of NZM will be to ensure sufficient supply of good quality iron ore to the steel plant for the life of its operations including the increased volumes required by any planned capacity expansions, it added.
With the joint venture companies taking over the assets, the Zimbabwe Government will be freed of all its guaranteed obligations under the Zisco debt, that includes guaranteed foreign debt, historic liabilities in respect of trade and other creditors, (including unpaid salaries and associated benefits owed to the employees), fixed capital investment for reviving the plant to 1.2 mtpa steel production and working capital requirements of the operations, said the release.