Essar Africa and Zimbabwe government seal Ziscosteel deal

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Essar Africa Holdings Ltd has entered into “definitive” agreements with the Zimbabwean government to revive the old Ziscosteel plant and develop an iron ore beneficiation plant in the country, businessdigest can reveal.

Report by Chris Muronzi

Documents seen by businessdigest this week shows that apart from the plan to revive the Ziscosteel plant and developing an iron ore beneficiation plant at Mwanesi, Essar is also going to invest several millions of dollars into a 552km railway line. The railway line will stretch from Mwanesi all the way to Savannem in Mozambique.

An internal Essar document said a memorandum of understanding with the Mozambican authorities had been signed.

According to information at hand, Essar is planning to revive the steel-making assets of Zisco and build a crude steel production plant with a capacity of 0,5 metric tonnes per annum (mtpa).

Under the plan, Essar will repair and refurbish key technology units such as the coke oven, the sinter plant, the steel-making plant, rolling mills and lime plant as well as install a new blast furnace. A new captive plant and oxygen plant would also be installed.

The iron ore reserves at Mwanesi are believed to be about 33 billion tonnes while the beneficiation complex at the site would have an installed capacity to produce 75mtpa of high grade iron ore concentrate for pellet-making and sintering.

According to documents seen by businessdigest, the iron ore beneficiation project will require 12-18 months for exploration and development, followed by a bankable feasibility study.

So far, 50 000 metres of drilling has already been completed, a report said.

The railway line will be a heavy freight dedicated single track line. The company said it would need 80 new locomotives and 10 shunting locomotives.

“Power will be sourced from a captive power plant and the type of traction will be electric. Traction power supply system with single-phase power frequency will be used and rated voltage of OCS is 25kV.A 2 by 27,5 kV power supply mode is adopted for power supply of the main line traction network. Each traction substation is connected with two circuits of 220kV power supplies which are mutually independent,” an internal Essar document shows.

Bickering in the inclusive government and fundamental differences delayed the full consummation of the US$750 million deal.

In March 2011, government sealed the US$750 million deal with Essar that resulted 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%.

The deal is largely seen going to be concluded should President Robert Mugabe appoint a cabinet this week as there would be an easing of haggling as government pulls in the same direction.

Former Industry minister Welshman Ncube and former Mines minister Obert Mpofu haggled over iron ore deposits although cabinet later made a series of resolutions on the issue.

2 thoughts on “Essar Africa and Zimbabwe government seal Ziscosteel deal”

  1. Optimistic says:

    This sounds like a good deal, should it become prosperous

    1. Mozguide says:

      Just wondering where Savannem is in Mozambique?

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