Industry minister Mike Bimha said government is set to assume Zimbabwe Iron and Steel Company (Ziscosteel)’s over $370 million debt to make the Kwekwe-based steel manufacturer attractive to potential suitors.
We are in the process of entertaining other investors. It was suggested by the Finance minister Patrick Chinamasa, that we clean Zisco’s balance sheet so this is almost done,” Bimha told delegates at the Zimbabwe National Chamber of Commerce last week.
“Now, we are looking at the entire steel-making sector so that we get investors. We also want to finalise the Zisco issue as soon as possible,” he said, adding that foreign iron and steel producers were still attracted to Zimbabwe.
This comes as the country’s $750 million deal with Indian firm Essar Africa Holdings (Essar) collapsed last year, with the investor bailing after steel prices plunged 40 percent in 2014. Apart from resuscitating Ziscosteel, Essar had also proposed to construct a 600MW thermal plant to boost power supply to the iron processor’s plant.
Bimha blamed political disagreement during the inclusive government era for the 2011 multi-million deal, which was expected to breathe a new lease of life in Kwekwe and the entire iron and steel industry.
“Bickering in the inclusive government between the Mines and Industry ministers stalled progress with the investment. But in 2013 when we came into power we managed to do what the inclusive government failed to do. But, the steel prices worked against us which led to Essar’s move to leave,” he said.
If the latest development sails through, it will not be the first time government has moved in to window-dress a State enterprise’s books.
Treasury last year pushed for government to assume over $1,35 billion central bank debt. There has also been talk of assuming Air Zimbabwe’s over $300 million debt and TelOne’s debt.
At its peak, Ziscosteel was the largest integrated steel works in Africa with a capacity to produce one million tonnes of the commodity annually, and its demise in 2008 came as no surprise due to the Zanu PF government’s chronic mismanagement, corruption and maladministration of the economy.
The company, affectionately known as the heartbeat of the Midlands Province, used to produce over 50 000 tonnes of prime iron and steel and employed over 6 000 workers.
Currently workers at the company, who have received intermittent salaries over the years, are owed more than $110 million.
Bimha, who at one time said Zisco would resume operations by December 2013, however, remains optimistic that the company will get an investor soon.
“We have received offers, we just need to sort the Essar debt issue first. Once the debt is out of the picture suitors will come, in fact they just need us to resolve it,” the Zanu PF legislator added.