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Chinese investor says no longer interested in US$1bn ZISCO deal

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  • ZISCO stopped operations in 2008, plagued by lack of capital to recapitalise as well as mismanagement. With its furnaces having the capacity to produce up to one million tonnes of steel per year, the company was among major foreign currency earners.

A Chinese company, R and F, has informed the government that it is no longer interested in the much-touted US$1 billion deal to acquire a stake in the defunct Zimbabwe Iron and Steel Company (ZISCO).

“R and F wrote to the Government advising that it was no longer interested. The parties could not agree after the new dispensation ordered the deal to be re-looked into.

“There are several issues the Government was not happy with. It is not like the Government wanted to side line the investor, but wanted a win-win situation,” a source told State-owned Herald.

The deal entailed acquisition of ZISCO’s majority shareholding by R and F to pave way for the resuscitation of its Redcliff-based iron and steel plant at a cost of US$1 billion.

ZISCO stopped operations in 2008, plagued by lack of capital to recapitalise as well as mismanagement. With its furnaces having the capacity to produce up to one million tonnes of steel per year, the company was among major foreign currency earners.

Zisco has been a subject of foreign investor interest in the past. Essar Africa Holdings, a unit of India’s Essar Group, had agreed to invest in Zisco in 2011 during the era of the inclusive Government, but the deal collapsed in 2015. This was after a similar deal with another Indian firm, Global Steel Holdings failed to materialise in 2007.

Essar planned to build a new steelworks complex, replacing the antiquated plant and exported it via a terminal it wanted to build in the port of Beira, Mozambique.

The company was also looking into the feasibility of building iron ore and coal terminals at the port of Beira. The other international companies that once showed interest in Zisco include ArcelorMittal South Africa, a unit of the world’s biggest steel maker.

Former ministers to superintend over failed ZISCO deals include Dr Obert Mpofu in 2006 when the company was negotiating with Global Steel; Professor Welshman Ncube during the inclusive Government between 2009 and 2013 during talks with Essar.

The deal collapsed when Dr Mike Bimha was the Industry minister, leading to signing the deal between Zisco and R and F, which was renegotiated under Nqobizitha Ndlovu, recently reassigned as the Minister of Tourism and Hospitality Industry.

In 2018, Minister Ndlovu told a business conference in Bulawayo that the Government was not satisfied with the progress, saying “we could open up for more interested investors”.

Last year, the Government took over both the external and domestic debt of Zisco of nearly $500 million as it sought to clear its balance sheet and attract investment.

Ziscosteel owed US$212 million in external loans, US$6 million to external suppliers, $57 696 085 in domestic loans and $219 113 219 to domestic suppliers.

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Herald
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