Ncube told MPs on Wednesday that the sale of Ziscosteel would be concluded by end of November if the principals –– President Robert Mugabe, Prime Minister Morgan Tsvangirai and his deputy Arthur Mutambara –– select a partner from among the three potential investors shortlisted by his ministry to buy a 60% stake in the company.
He said his ministry has made recommendations on who should be selected to buy the equity in the debt ridden company.
Ncube said: “I am happy to say that the ministry has come to the tail-end of the selection process. We received four bids and three of them are technically sound. We recommended three companies to the principals for their consideration. These are Jandal Steel of India, Accer-Mittal and Sino Zimbabwe. The principals are considering this and a decision would be made within the next weeks.”
He said this in response to Kwekwe MP Blessing Chebundo who had asked what the ministry was doing in finalising the resuscitation of the ailing steelmaking company.
Ncube conceded the matter had taken long to conclude but remained convinced that a resolution would be found and alleviate the suffering of Ziscosteel employees who have borne the brunt for the last couple of years.
“It is unfortunate that it has taken so long to complete this matter. The matter has been outstanding since 2009,” the minister said. “We did inherit the process of trying to identify a partner to allow Ziscosteel back into production. We are aware Zisco is bleeding and the employees should find respite. The matter will be finalised in the next three to four weeks.”
The process of identifying a partner for Ziscosteel had been bogged down by a number of issues, among them, the large debt overhang, political instability, an unstable monetary policy and failure to find local investors who had deep pockets needed to revive the company.
“Zisco has two major debts, one to a Chinese bank that was due and has been renegotiated to be paid by end of 2011. The other debt involves US$240 million from a German bank. Any new investor had to make a commitment to liquidate this debt which has caused some government properties in Botswana and South Africa to be attached,” Ncube said.
“The investor had to put in US$65 million for refurbishment of blast furnaces four and three and the coke oven. In addition to all this, the investor should also be in position to pay for government shares when the government divests.”
He added: “Foreign investors were also sceptical of the economic and political situation in the country. They were worried if the government of national unity was sustainable, the monetary policy was shaky and local investors could not raise that kind of money.
Our banks could not do it. This explains the delay.”
Last week, opulent businessman Philip Chiyangwa wrote to Mugabe asking him to consider his company to buy the Ziscosteel stake.
The minister’s response could dampen the businessmen’s plans which were hitched on the clarion call for indigenisation.
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, ArcelorMittal South Africa, a subsidiary of the world’s largest steel manufacturer, ArcelorMittal Group with a market capitalisation in excess of US$35 billion, is also said to be back in the race.
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 in anticipation of a possible acquisition of the Zimbabwean steel asset and make its first foray into iron production.
The new round of bidding came soon after government shot down a recommendation from the ministry that shortlisted Jindal Steel (Pvt) Ltd of India and the South African subsidiary of Arcelor-Mittal, another global steel giant.
Ziscosteel is the largest steel works in the country. Over the years the company has faced many operational problems and has been dogged with countless corruption scandals.
As of early 2008, the company was producing less than 12 500 tonnes, way below the break-even capacity of 25 000 tonnes. It is wholly owned by government.