Essar deal safe after general elections –– Ncube

INDUSTRY and Commerce minister Welshman Ncube says government’s steel production partnership with Essar Africa Holdings (Essar) will not be affected by a change in government ahead of general elections on July 31.

Report by Taurai Mangudhla

In an interview with businessdigest this week, Ncube said the investment was made by government and not individuals, assuring Essar that the foreign firms’ investment was safe.

“The agreement was made by the entire inclusive government and if there is a change of government all the parties have a mandate to fulfil it,” Ncube said.

“I don’t foresee a situation where the new government is outside the three parties in the current inclusive government and in any case the agreement itself has been signed for even when we have a new government.”

Ncube said bickering in the current inclusive government and fundamental differences delayed the full consummation of the US$750 million deal.

He specifically cited the ministry of Mines’ delay to allocate ore rich claims to the new mining vehicle.

“The new company has land claims at Ripple Creek, Buchwa and a prospecting license at Mwanesi. The other two were secured from the ministry of Mines without difficulty, but the Mwanesi was a bit problematic.”

To expedite its conclusion, the deal was put in the Office of the President and cabinet (OPC), but it appears the move achieved the opposite with Industry and Commerce secretary Abigail Shoniwa in June indicating her department has lost grip on processes leading to full consummation of government’s steel production.

Giving oral evidence in a parliamentary portfolio committee on industry and commerce, Shoniwa said the ministry was no longer directly in control of the deal after OPC took over coordination in early April.

Asked by the committee to give possible deadlines for specific targets relating to conclusion of the US$750million deal, Shoniwa said:“We have (previously) set deadlines, but it is difficult when it’s not under another entity’s control.”

Shoniwa had earlier said the OPC had taken over negotiations after parties involved reached an impasse.

“There was nothing happening so I think the OPC came in due to frustration of delays. The decision by cabinet just escalated to a higher level, I think it was out of anxiety to see the deal closed,” she said.

Facts about Essar deal in brief

In March 2011, government sealed the US$750 million deal with Essar resulting in Ziscosteel being unbundled into two companies, NewZim Steel and NewZim Minerals. The deal gave Essar 54% control of the new company New Zim Steel.

As part of the deal, Essar, was also awarded 80% ownership of NewZim Minerals with the government holding the remaining 20%.

It has, however, not been consummated due to haggling over iron ore deposits although cabinet made a series of resolutions on the issue.