ESSAR-ZISCO deal to be finalised within three weeks


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The ZISCO-ESSAR deal is still on and the transaction should be closed within the next three weeks, Industry and Commerce Minister Mike Bimha said this week.

He said the vice-President of ESSAR was expected in Zimbabwe anytime to reassure the nation that ESSAR is still committed to operate.

“Once the transaction is closed, work commences. I would like to add that when we talk about work commencing, it means… work on the construction but there will be other activities that will take place while the construction is taking place so that we keep the staff employed.

“There are a number of activities that management is looking at and one of these is to ensure that the Lancashire Steel starts operating. As you know, for Lancashire Steel to operate, you need steel billets supplied to Lancashire Steel.

“As of now, we do not have those billets but we will import them and they will be supplied to Lancashire Steel to start operating while construction work is taking place. That is just an example of the activities that will take place before we start the process of steel making.” Bimha said.

 

Q & A

 

MR. MADZIMURE: Thank you Madam Speaker. My question is directed to the Minister of Industry and Commerce, Hon. Bimha. Towards the end of last year, Government promised that, come 2014 January, ZISCO Steel will be taking its life. It is now three months into the New Year and the problems at ZISCO Steel appear not to be in any position to be resolved. Can you inform the House what is happening and whether we should still pin our hopes on the ESSAR agreement or we have to forget it and start on a new page.

THE MINISTER OF INDUSTRY AND COMMERCE (MR. BIMHA): Thank you Madam Speaker. I would like to thank Hon. Madzimure for a very pertinent question. It is not only of interest to those in Kwekwe, Redcliff or Midlands but the entire nation and industry as a whole. Let me preface my part by addressing your last question to say, can we still pin our hopes on ESSAR as an investor and can we still hope that the New ZimSteel will become operational.

The answer is yes. The delays that we experienced towards the end of last year were mainly due to two factors.

The first one is that you must, as I indicated some time ago, because of the state of affairs on the equipment at New Zim Steel, there will be construction of at least new plants alongside what we have. In other words, it is no longer an issue of rehabilitation but more of constructing certain new structures. That entails a lot of work in terms of planning. It also entails a lot of work in terms of making orders of new equipment and new machinery which also…

THE ACTING SPEAKER: Order. Hon. members, can you please give the Minister a chance to respond to the questions. Thank you. Hon. Minister, can you continue.

MR. BIMHA: Thank you Madam Speaker. Therefore, there is time that is required to make orders. I would like to advise the member that two weeks ago, I visited ZISCO Steel in Redcliff to meet the management as well as workers, in order to brief them on where we are.

Also, to indicate to them the Government’s commitment that we operationalise ZISCO Steel as soon as possible. I would like to believe that sometime this week, we will be able to know when the vice Chairman of ESSAR will be visiting Zimbabwe to do two things: to reassure the nation that ESSAR is still committed to operate. Once the transaction is closed, work commences. I would like to add that when we talk about work commencing, it means, as I indicated earlier on, work on the construction but there will be other activities that will take place while the construction is taking place so that we keep the staff employed.

There are a number of activities that management is looking at and one of these is to ensure that the Lancashire Steel starts operating. As you know, for Lancashire Steel to operate, you need steel billets supplied to Lancashire Steel. As of now, we do not have those billets but we will import them and they will be supplied to Lancashire Steel to start operating while construction work is taking place. That is just an example of the activities that will take place before we start the process of steel making. We are waiting to confirm on the date that the vice President of ESSAR is coming to Zimbabwe and when he comes, we make the transactions and rollover the programme that ZISCO will take over from there on. I thank you.

MS. ZINDI: Thank you Madam Speaker. Is it true, Hon. Minister that ESSAR deposited some finances in order to operationalise ZISCO Steel but the funds were not channelled to the operation.

MR. BIMHA: Madam Speaker, I would like to thank Hon. Zindi for the question. The answer is: it is not true. The agreement states that the investor, who is ESSAR, will take over the external creditors which will be our creditors in Germany and also creditors in China and that the Government of Zimbabwe was going to fund the local creditors. It is also part of the agreement that ESSAR, as an investor, will put money. But, there is no money that was required prior to the closure of the transaction. It is only after the closure of the transaction that ESSAR is required in terms of the agreement to start putting money into the operationalisation of ZISCO. As I said earlier on, it is this closure of the transaction that we are busy working on at the moment.

MR. MADZIMURE: Thank you Madam Speaker, thank you Minister for an elaborate response. I think Minister, what is missing on your response is the timeframe. Can we know, at least as Zimbabwe, when we will substitute the importation of steel from other countries? So can you tell us when do we or do you expect ESSAR to start producing steel for local use.

THE MINISTER OF INDUSTRY AND COMMERCE (MR. BIMHA): Thank you Madam Speaker. Once again, I thank the hon. member for the question. The date is only
determined after getting the technical input of what has to take place first. What I can assure you is that we are planning to have the closure of this transaction in a period of not more than three weeks and it is at this juncture that we will get a detailed report from the technical people. Some of the work that I am referring to is being undertaken outside Zimbabwe with consultants and at the time that we close the transaction, we would have received a full report of the technical experts as to when this does happen. I will give an example of the construction of a particular furnace. They will then indicate when that starts or when they anticipate that project to be completed.

However, as I indicated to you earlier on, we will continue to look at the possibility of other activities while we are waiting for the production of steel. As I indicated, we should be able, in not more than three weeks to be able to witness the closure of the transaction as well as the unveiling of the road map as it were.

(60 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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