Gateway Consortium, a consortium made of Jindhal Steel of India and local businesspeople, has also proposed to take over Hwange Colliery Ltd as part of its plans to revive Zisco, this paper is informed.
People close to the development say Gateway is prepared to pay US$90 million for 51% of the total issued share capital in the colliery. This, sources say, would guarantee Zisco reliable coal supplies.
The consortium is backed by a regional development bank and a large development corporation, according to documents seen by this paper.
At least US$327 million will go into debt absorption.
Gateway is said to have proposed US$76 million in capital expenditure. The company wants to lift output to 4,8 million tonnes of coal inside the first year. A further US$100 million will be advanced to further lift output to six million tonnes.
Should the deal sail through, Hwange will earn about US$250 million in coke and coal exports.
In its proposal to government, Gateway is seeking to invest US$12, 5 million in the mothballed Munyati Power Station. Once operational, the Midlands-based power plant is expected to produce around 80 megawatts in three months.
Of the 80 mw, 20 mw will be dedicated to Zisco while the remaining 60 mw will be for national consumption.
The company is also planning to set up a 2 000 megawatt thermal power station and a stainless steel plant.
At least US$650 million will be advanced into resuscitating Zisco. When the investment goes through, sources say the company will be able to produce 700 000 tonnes of steel inside 18 months.
The company is also planning to buy 21 locomotives for the National Railways of Zimbabwe.
Government is still to decide whether or not to sell Zisco despite these investment prospects.
Government three weeks ago approached ArcelelorMital and Jindhal Steel to invest US$230 million for a 60% stake but is still to announce the winner of the bid.
The offer for the Zisco equity comes after government offered the two companies shareholding in the troubled steelmaker after a German company attached Zimbabwe’s assets over a US$50 million debt.
Part of the US$230 million will be used to retire a euro 40 million debt accrued by Zisco in 1998.
President Robert Mugabe reportedly rejected ArcelorMittal and Jindhal’s bids saying the two entities were too big.
Mugabe is said to have recommended medium-sized companies to buy equity in Zisco. But analysts say Zisco needs an investor with a deep pocket to get the steelmaker back on stream. Gateway is said to have made a commitment to invest over US$2 billion in getting the plant operational, build a stainless steel plant and a 2 000 Megawatt power station.
Jindhal is the world’s third largest steelmaker by tonnage with an annual turnover of about US$2,1 billion and forms part of the larger Jindhal Group with total assets in excess of US$12 billion. Jindhal’s rival is ArcelorMittal South Africa, a subsidiary of the world’s largest steel manufacturer, ArcelorMittal Group, with a market capitalisation in excess of US$35 billion.
ArcelorMittal has a presence in more than 60 countries. By February, Arcelor was said to have been holding onto cash of over US$300 million to invest in Zisco.
Zisco owes a German development bank, KFW Bankgruppe, after the company failed to pay the loan over a prescribed period of time. Properties in Pretoria, Johannesburg and Cape Town are due to go under the hammer on July 1 this year.