India’s Essar Global Invest’s $4 Billion On Zimbabwe’s Steel Mining Sector
INDIA’S Essar Global is to sink $4bn into Zimbabwe’s collapsed steel mining and beneficiation industry over the next 10 years through a capital injection into NewZim Steel, a joint venture partnership with the Zimbabwe government.
Essar owns about 54% in NewZim Steel, formerly the Zimbabwe Iron and Steel Company (Zisco), and also controls another 80% of the Buchwa iron ore reserves.
Essar and the government of Zimbabwe agreed in August last year to set up the two joint venture companies that will acquire all the steel and mining-related assets and liabilities of Zisco and its subsidiaries.
Firdhose Coovadia, Essar’s resident director for Africa, Middle East and Turkey, told an investment conference in Harare earlier this week most of the capital will be used to expedite the rehabilitation of NewZim Steel’s plant in Zimbabwe’s midlands region. Essar also plans to construct a beneficiation and electricity plant and to venture into exploration for new iron ore reserves.
“We will invest $1bn in a steel plant to achieve annual production of 1,2 million tonnes and $100 million on ore reserves that have not previously (been) explored and $3bn to create a world-class beneficiation plant and a separate power plant,” said Coovadia.
Essar appears not to be too concerned Zimbabwe’s indigenisation policy, which has spooked some investors in the country. Coovadia said “there has been a meeting of minds” with the current coalition government.
Essar has been given leniency to own the 54% stake despite Zimbabwe’s contentious empowerment policies which state that foreign mining companies should not own more than 49% in local operations.
Finance Minister Tendai Biti said there has been a misunderstanding of the country’s indigenisation policy and its regulations. He said the 51% benchmark “is an aspiratory target and not a mandatory target”.
Biti said that the law “is not about expropriation” as it states that whatever “shares or assets” that must be ceded “have to be paid for at value”.
“What we understand is that mineral resources have become an issue of national pride and ownership and we want government to be able to monetize these resources through our investment,” said Coovadia.
Essar has also applied for an independent power producer (IPP) license to set up a thermal power station at Hwange, which has vast coal deposits.
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