CABINET on Tuesday gave an inter-ministerial committee, which was established last week to spearhead the resuscitation of the defunct Zimbabwe Iron and Steel Company (Ziscosteel), the greenlight to scout for a foreign investor, but wants to retain majority shareholding, official sources told the Zimbabwe Independent.
The decision followed a meeting which the taskforce — chaired by Industry and Commerce minister Sekai Nzenza — had with various stakeholders last Friday.
Nzenza reported back to cabinet at its weekly Tuesday meeting this week, where she said the committee had resolved to scout for a foreign investor.
“She (Nzenza) reported that her committee held an all-stakeholders’ meeting on Friday last week involving officials from the Reserve Bank of Zimbabwe, the State Enterprises Regulatory Authority, the Zimbabwe Investment and Development Agency and other government departments,” an official source said.
“She said the committee had done an assessment of the plant and had been appalled by the loss of assets and debt accumulation there.
“Basically, it was realised the company only had four assets worth considering, namely: the coke batteries, coal handling facilities, a conveyor belt and coal shoving equipment. The rest is either dilapidated or obsolete.
“She also reported that there was need for an urgent valuation of the assets in order to ascertain how much is required in terms of investment. She told the meeting that, currently, the company was being pestered by state-owned German bank, KfW (Kreditanstalt für Wiederaufbau, anglicised as Credit Institute for Reconstruction) over a US$225 million debt, among many other debts.
“Nzenza told cabinet in her report that it was resolved at the Friday all-stakeholders meeting that in light of the current state of affairs at Zisco, the only way to revive it was to find a foreign investor who would bring in a lot of money.
“So cabinet at the end gave her committee the greenlight to scout for that foreign partner, but insisted that government should be the majority shareholder in any deal which might come out of the negotiations.
“The general feeling was that it would be very unwise to put such a strategic industry in the hands of foreigners.”
Cabinet also approved Nzenza’s request to be allowed to recruit a chief executive officer for Ziscosteel and commence preliminary works on the massive Redcliff-based premises.
“She reported that the committee was of the opinion that for things to start moving, the company needed to have a CEO whose immediate role would be to oversee preliminary work. Cabinet then said the committee should immediately start the process of hunting for the CEO. It was also resolved that since Ziscosteel does not have any employees at the moment, having laid off workers in 2016, they should source unskilled workers from Hwange Colliery Company to do the preliminary works,” the official said.
A 2006 parliamentary inquiry established that the company was brought to its knees as a result of a looting spree by government ministers and senior officials.
However, the report was never published.
Several efforts to revive the massive steel manufacturer, which at its peak employed over 5 000 people, have yielded no fruit mainly on account of bureaucratic woes and allegations of corruption.
Last year, a US$1 billion deal with Chinese company Guangzhou R&FA to resuscitate Ziscosteel collapsed after the government changed its shareholding offer to the company’s president, Zhang Li.
The Chinese billionaire, who is into real estate development, was willing to start work on the collapsed steel giant and progress had already been made in procuring some equipment.
At first, Guangzhou R&FA offered 100% shareholding in the steelmaker, but the government later changed it to 48%.The Chinese team did not like the new deal.
In January 2018, President Emmerson Mnangagwa promised that Ziscosteel and Shabani Mashaba Mines would commence operations within his first 100 days.
There has, however, not been any activity to date.
Ziscosteel officially closed its gates in 2016 and laid off workers without terminal benefits.Most of its infrastructure, equipment and spares have either been vandalised, looted or become obsolete over the years of the company’s redundancy.
In 2006, Indian firm Global Steel Holdings Limited courted Ziscosteel with the intention to inject US$400 million in a rehabilitate, operate and transfer arrangement, but the deal suffered a still birth.
In 2011, Essar Africa Holdings’ bid to take over in a deal worth US$750 million also hit a brick wall due to bickering in the then inclusive government comprising of Zanu PF and MDC-T.