HomePoliticsGovt battles to rescue Essar deal from collapse

Govt battles to rescue Essar deal from collapse

The meeting, which was chaired by President Robert Mugabe and attended by ministers, resolved Essar should be given 20 claims in Mwanezi Ranch while exploration is being done on the remaining concessions to determine the quantity and value of iron ore reserves it critically needs in the area.

Government and Essar reached an agreement in March last year in which the Indian firm acquired a 60% stake in Ziscosteel to form a new company, NewZim Steel Ltd.
Essar also acquired 80% of Buchwa Iron Mining Company (Bimco) to form NewZim Minerals Ltd. Bimco held the rights to iron ore claims for feedstock into Zisco operations.

However, Essar has failed to kick-start operations because the Ministry of Mines had refused to give it mineral rights to mine in Mwanezi, arguing it does not know the quantity and value of the iron ore. This was amid claims there are 30 billion tonnes of high-grade reserves and the country could lose billions of dollars in the process.

In March, Mugabe instructed Mines minister Obert Mpofu and Industry and Commerce minister Welshman Ncube to speedily resolve the issue but the problem persisted. Cabinet ministers said Ncube on Tuesday gave a detailed update report on the Essar deal so far.

He indicated that Essar was given mineral rights to mine the Buchwa and Ripple Creek claims. Buchwa has about 15 million tonnes of iron ore, but the mineral is believed to be so deep that it cannot be mined unless new technology is introduced.

By the time Ziscosteel ceased operations, Bimco had already stopped mining the claims. The Ripple Creek claim in Kwekwe has about 30 million tonnes, but the iron ore is of a low grade with 54% iron ore content instead of the recommended content of between 64% and 74%.

Besides that, the iron ore at Ripple Creek would be exhausted in five years at the level of mining which Essar wants to operate, and the Indian company has been arguing that by then it would not have recouped its investment. This made the Mwanezi claims critical to the deal.

“Ncube presented a report and it was debated afterwards. Then a consensus was reached.
“Mpofu and Ncube later met to iron out issues before they could inform Essar of the decision,” one minister said.

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