eBusiness Weekly
Golden Sibanda
Government says the agreement with Chinese investor, R and F, for the US$1 billion revival of former steel making giant Zisco, remains firmly in place, but a few loose ends relate to iron ore claims to be granted to the investor.
The defunct Redcliff (Midlands Province) based steel manufacturing company holds 100 percent of Buchwa Iron Ore Company (BIMCO), which holds the rights to nearly all the iron ore mining claims in Zimbabwe.
Previously, there were no issues regarding control of BIMCO and its mining rights given since the company is owned by Government through Zisco.
However, Government contends that no individual company should be allowed to have such huge ownership of a strategic resource at the exclusion of other potential participants or investors, because it is impractical for a single entity to commercially and optimally develop the mineral.
Arguably, differences with prospective Indian investor Essar Holdings, over iron ore rights, was partly to blame for the collapse in 2015 of an agreement that had been signed with Government in 2013 to revive Zisco.
The Government has also previously had serious problems repossessing mining claims from individual entities that had been given too much mineral rich ground, which they would not work for many years to come.
Such scenario happened with regard to land previously allocated to Zimbabwe’s biggest platinum miner, Zimplats, which had obtained excessive land it did not require and would not develop for over 50 years.
The acrimonious dispute, stretching as far back as 2013, once spilled into courts of law and attracted global headlines. It was finally resolved last year, with Zimplats agreeing to release 27980 hectares of platinum rich ground.
Industry and Commerce Minister Mangaliso Ndlovu said because Zisco was a national asset, Government did not want a situation where one day Zimbabweans would wakeup “without something (left) for the country”.
“We are trying to common ground on issues that we need to come up with an agreement that protects both parties, remember Zisco is a national asset. We do not want to wake up one day without something for the nation,” he said.
In its quest to open up the domestic industry to other players, the Government recently granted Chinese stainless steel giant Tsingshan a special grant for iron ore mining rights in Chivhu, Mashonaland East Province.
This was to enable the company, which is also from China, to establish a stainless steel manufacturing plant, similarly, for an investment of US$1 billion.
The area in and around Chivhu is believed to hold the bulk of known iron ore reserves in Zimbabwe, amounting to approximately 36 billion tonnes.
Zimbabwe has also had serious issues repossessing vast swathes of chrome rich ground from two major chrome miners, Zimasco and ZimAlloys, to give to potential investors who needed the land for immediate exploitation.
In 2017, the Zimbabwe’s Government said it had repossessed about 18 000 hectares of unutilised chrome rich ground and was targeting to reclaim a further 40 000 hectares from both Zimasco and ZimAlloys.
On the Zisco deal, Minister Ndlovu said only two ‘minor’ issues were still outstanding, but pointed out that significant progress had already been made on one.
“An agreement is already there and it’s signed, but there are areas that need to be finalised. There are certain areas that needed to be relooked at and they are not major ones,” he said.
Zisco closed operations in 2008 after facing operational and financial challenges.
By 2000, Zisco was operating without a full board. Its blast furnaces were no longer functional while its plants and equipment was now obsolete.
As of early 2008, one of Africa’s largest steel making company was producing less than 12 500 tonnes, far below the break-even capacity of 25 000 tonne.
Essar Africa Holdings, a unit of India’s Essar Group, had agreed to invest in Zisco in 2011, but the deal collapsed in 2015 largely as a result of disagreements over the extent of iron ore claims.
This was after a similar deal with another giant Indian steel company, Global Steel Holdings, failed to materialise under as yet unclear circumstances.
Zisco, once a major foreign currency spinner, used to produce about one million tonnes of steel per year at its zenith before it started falling to its knees.
