State-owned Zimbabwe Iron and Steel Company (Ziscosteel) has resolved not to re-negotiate the deal in which, ZimCoke wanted to take over some of its assets after the Treasury confirmed the US$225 million debt, which purportedly formed the basis of the transaction had not been taken off from the Ziscosteel balance sheet.
This was after the board wrote to the Ministry of Finance and Economic Development seeking confirmation of transfer of the debt owed to a Germany bank from Ziscosteel’s books to ZimCoke, a vehicle fronted by former legislator Eddie Cross.
ZimCoke purportedly bought ZISCO assets related to production of coke and coke oven gas and various associated equipment and infrastructure under a debt/asset swap, which would have seen ZimCoke settling a debt owed to a German bank.
The transaction valued at US$225 million was signed in July 2017, when Dr Mike Bimha was Industry and Commerce Minister.
It was given final approval by Cabinet on May 4 last year and the transfer of the assets was signed for a month later.
Some assets that would have been taken over under the controversial deal include the coke oven battery, rail infrastructure, coal handling facilities and residential properties.
Upon assuming office, the board directed the management to analyse the ZimCoke deal and its impact on the resuscitation of once Africa’s largest integrated steelworks.
The board then resolved to terminate the deal on the basis that it impinged the revival of ZISCO to an extent that its revival as an integrated steelworks would have been difficult since most of the important components would become inaccessible.
This position was communicated to Cabinet which in turn directed the board to review the deal.
“The debt was not taken off so there is no point for renegotiations,” ZISCO acting chairman Dr Gift Mugano told Business Weekly in an interview on Wednesday.
“So we maintain our earlier position and we will advise the authorities accordingly.
“We were going to use moral suasion to re-consider our position; to see what can be salvaged but that is quite difficult when the debt which was purported to have been taken over still remains in our books and there is no such commitment.”
“If the debt had transferred to the private sector, then obviously we would have reconsidered our position as per Cabinet directive.”
Top Treasury sources also confirmed that they had not received an undertaking from the German bank to move the debt from ZISCO to ZimCoke.
“If there is anything of that sort, then it should be still under negotiations,” said one source.
No comment could be obtained from Cross by the time of going to Print, although he had promised to do so.
ZISCO stopped operations in 2008, plagued by a lack of capital to recapitalise its operations.
With its furnaces having the capacity to produce up to one million tonnes of steel per year, the company was among the country’s major foreign currency earners.