Ziscosteel, Chinese investors and Zimbabwe’s poor record for negotiating investment deals

It is not clear now what the government plans to do differently.

Bimha says they would want the new investor to “focus more on steel making”.

But it is unlikely that R&F would agree to only make steel that would inevitably be more expensive than the steel made in its home country, where subsidies drove prices in 2015 to their lowest levels in a decade.

Zisco comes with a whole lot of baggage, beyond the debt that government has pledged to lump on the taxpayer.

To revive Zisco, whoever runs it would also need other loss making firms that are linked to the company to work.

Among these are coal producer Hwange, power supplier ZESA, and the National Railways of Zimbabwe.

Zisco also needs Sable Chemicals, which supplies the oxygen for the plant.

But Sable itself just as obsolete and in desperate need to be pulled out of the stone-age.

Besides, the world has moved on since Zisco’s heyday.

The markets that once made Zisco great have all since moved on to new suppliers, and no local steel can compete on price with China.

Zimbabwe now imports $400 million worth of steel each year, according to the central bank.

So, what does the government do now?

R&F will not spend a billion on just a plant that simply no longer exists, and the government itself is understandably reluctant to give away too many of Zimbabwe’s resources.

The government has always negotiated badly with foreign investors, and this new interest by R&F, with its own lack of experience in the sector, presents a new test for Zimbabwean officials’ notoriously poor deal making skills.

Continued next page

(696 VIEWS)