A DELEGATION from India’s Essar Holdings is to meet government to renegotiate the shareholding structure of NewZim Steel (formerly Ziscosteel) in a bid to bring protracted talks to an end so that the steel giant can resume operations.
Essar paid US$750 million for 60% ownership of NewZim Steel and assumed the company’s debt of over US$$400 million and US$12 million in unpaid salaries over and above retaining 3 500 workers employed by the defunct Ziscosteel in August 2011. Government holds the remaining 40%.
Under the deal, Essar was also given 80% ownership of NewZim Minerals, formerly Buchwa Iron Mining Company (Bimco), with government controlling 20%.
Government initially complained Essar should not have been given 80% of the Bimco iron ore claims because their value could not be ascertained, but the impasse has taken a new twist with authorities now demanding that the deal be restructured in line with the country’s indigenisation policy.
Government now wants its shareholding in NewZim Minerals increased from 20% to 51% while Essar reduces its stake to 41%.
Industry and Commerce minister Welshman Ncube said he met Essar owners on Wednesday and more negotiations would be held until a breakthrough is found. The ownership structure has stalled operations at the former Ziscosteel, which was closed in 2008.
“The delegation will meet their lawyers before we meet again for negotiations. We are hoping for a breakthrough so that production starts at the company,” said Ncube.
The company, which had been paying workers’ salaries without operations, suspended 1 500 workers’ salaries in May to press government to finalise the stalled take-over agreement.