Zimasco burns in ‘financial, political storm’

Ferrochrome producer Zimasco (Private) Limited has won a judicial management order to preserve its assets amid revelations that the company was sitting on a ticking time-bomb related to its “toxic” environmental management policy.

This also comes as the Chinese-owned metals group has lurched into a political storm after misleading Vice President Emerson Mnangagwa that it was on a recovery path last Friday — exactly the same day it was seeking High Court judge David Mangota’s approval to be placed under Reggie Saruchera’s caretaker management.

“The applicant company, Zimasco (Pvt) Ltd, be and is hereby provisionally placed under judicial management…,” he said in a June 3 consent order also listing about four key Zimbabwean banks, adding the applicant would also “submit a revised and bankable recovery plan to Deloittes Hong Kong and its local arm for review”.

“To secure a written undertaking from Sinosteel Corporation Limited… to providing adequate funding for the bankable recovery plan,” Mangota said, noting that the rescue plan must be submitted to creditors within 60 days of the ruling.

According to the court papers, MBCA Bank and its parent South African company — Nedbank, Stanbic, the Central African Building Society and Atlas Mara-owned African Banking Corporation Zimbabwe Limited were listed as the main financial institutions.

While the recent order refers to a recapitalisation plan from Zimasco’s Chinese parent and that all “writs, summons and executions had been stayed”, the Midlands-based company is facing serious questions about its environmental management policy at its Kwekwe plant and whether shareholders are really keen on refinancing to the tune of millions by July 2016.

As it is, the company owes banks and other suppliers in excess of $100 million and it is unclear whether the seething creditors would also want to fund the clean-up exercise said to be in the region of $50 million.

Saruchera will take over management of the struggling ferrochrome producer and is to report on the state of the firm to the Master of High Court, according to provisions of the management.

As debate rages on the government-sanctioned environmental assessment report, it has emerged that authorities were not only alarmed by the level of contamination at Zimasco’s works, but that such sensitive natural facets as surface and groundwater bodies were badly damaged with chemical or substances such as lead.

“It was noted that certain elements (toxic materials) were present in concentrations of alarming levels (which) transgress globally-accepted (and) allowable levels of contamination,” a government insider said, adding the whole episode and disaster is bordered on “criminal negligence”.

“For example, one sampling point… was found to be flowing from a trench to a pollution-control dam, which was overflowing and seeping into the immediate environs,” they said,

On the other hand, Portnex International continues to successfully manage Zimasco’s waste plant which it took over in February.

Meanwhile, representatives of fellow ferroalloys producer — Zimbabwe Alloys (ZimAlloys) have vowed to resist Mines minister Walter Chidakwa’s order to ceded 50 percent of its mining claims for redistribution to other parties.

This comes as the mothballed miner was given up to Tuesday to comply with the order or risk having its tributaries seized by President Robert Mugabe’s government.

Before the new measures and order, the Zimasco-ZimAlloys duopoly controlled about 80 percent of the country’s chrome ore claims, and mostly found on the north-south Great Dyke.

On its part, John Musekiwa’s company had surrendered a significant portion of its mining ground to the Harare administration in the first quarter of this year, while the former Anglo American subsidiary is being accused of heeling-dragging, hence the latest impasse or stand-off. Daily News