Five suitors eye Zisco
AT least five regional and global firms have mounted fresh bids to take over the Zimbabwe Iron and Steel Company (Zisco), as government tries to court new investors to revive what was once one of Africa’s largest integrated steelworks, the Financial Gazette’s Companies & Markets (C&M) can report.
This follows the unceremonious exit of Indian conglomerate, Essar Africa Holdings, which had taken over the steelmaker after a transaction government said “had been sealed on August 3, 2011”. A joint government and Essar statement had announced the launch of NewZim Steel (Private) Limited and NewZim Minerals (Private) Limited, which had reportedly resulted in the demise of the Zisco brand, whose troubles had been caused by huge debts, corruption and mismanagement for over a decade.
Essar had undertaken to take over Zisco’s debts, invest in new iron ore fields in Chivhu and pay its 3 000 workers’ salaries.
But conflict in the then inclusive government led by President Robert Mugabe’s ZANU-PF and former Prime Minister Morgan Tsvangirai’s Movement for Democratic Change between 2009 and 2013 reportedly precipitated collapse of the Essar deal, whose departure even surprised government as it appears to have been abrupt.
This week, Industry and Commerce Minister, Mike Bimha, who has been spearheading efforts to rebuild Zisco, told C&M that they had received a significant number of enquiries from potential suitors, with at least five firms making serious intentions to buy Zisco.
“Even before we started asking for bids, we have had so many people enquiring,” said Bimha.
He said while Essar had indicated that they could still return after the turmoil rattling global commodity prices, Zimbabwe, desperate for fresh injections to repair its failing economy, was now open to other bids.
“Unfortunately, we cannot wait forever. We need to move on,” said Bimha, who spoke exclusively to C&M last week.
Asked to disclose the identity of the potential investors, Bimha said: “I would not mention them but we have had so many inquiries. At the moment, I think we have about five who have expressed interest, some of them are quite big but our doors are open as we are now not looking at Zisco alone. Even Essar demonstrated to us that it was cheaper for them to start a new plant,” the Minister said.
Many blame government for failing to handle the Essar transaction that held the hopes of an entire country and the region.
But Bimha said he made great effort to clear the hurdles that had affected progress for two years when he was appointed to the industry portfolio in 2013 following the ruling ZANU-PF party’s landslide victory and the consequent dissolution of the inclusive government.
He said the problem had largely been that global commodity prices tumbled and Essar became hesitant to proceed with the project.
The Indian firm had invested heavily in other markets during the time when Zimbabwe was procrastinating, he said.
“One of the lessons that we learnt is that we should never have an inclusive government,” said Bimha,
Asked why other projects had been successful in other coalitions, Bimha said those countries had been ready for shared power, and they had little differences.
“It (sharing power) is a culture that you develop with time. It is very difficult to compare countries because the political culture is different. That is why at the moment you don’t hear much of coups in Africa. But at one time it was the in thing. You now find those countries that used (to have coups) are talking of elections.
“Because we had two parties in government, there was this bickering, continuous bickering. But I salute Essar; they waited because they were looking at the long term. They could have said look, we are sorry, we are going. Essar’s coming here was not because of Zisco alone. They were looking at Zimbabwe as the springboard into the region. They were prepared to take over the debt because they were looking at the long term. But because of that bickering, nothing could happen,” he said.
Bimha said after the new administration in 2013, it took less than one month to clear the hurdles, yet it was too late.
“Within a month, we had completed what we had to do and we delivered. But because they (Essar) had stopped (in Zimbabwe), they had concentrated efforts elsewhere. When we then said we have solved the problems, they said they needed time to sort them out and they even came to redo the plan.
“By the time that they expressed that they wanted to come back, and we had meetings, all of a sudden commodity prices went down, a number of steel making plants closed. Some of them are still closed.
“They said at the moment we cannot go and arrange funding. But if anything changes we will come back,” he said.
Bimha said Zimbabwe was desperate to get its steel industry working again.
“We are looking at resuscitating our steel industry. Whoever wants is welcome. We want to initiate a process of assuming the Zisco debt. In the past we used to look at Zisco revival as Alpha and Omega. We must make Zimbabwe a giant in steel-making,” he said.
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