Indian firm Balasore Alloys (Balasore) confirmed its intention to acquire a majority shareholding in leading chrome producer, Zimbabwe Alloys (Zim Alloys).
Balasore, formerly Ispat Alloys, said it will acquire either by itself or through its nominees and affiliates, 70 percent shares of Zim Alloys.
Zim Alloys, which is under judicial management, holds 19 780 hectares of mining areas in different parts of Zimbabwe and has proven resources of 72,25 million tonnes of chrome ore.
Balasore share price gained nearly 6,0 percent in the early trade yesterday on Bombay Stock Exchange after it announced its intention to acquire Zim Alloys despite the fact the acquisition is still subject to fulfilment of certain conditions precedent contained in the scheme of arrangement.
Last year, Zim Alloys judicial manager Reggie Saruchera said the company had met its creditors and unveiled the new investor after which the creditors approved the proposed deal that will see Balasore injecting $100 million into the chrome smelting company.
Half of the amount will go towards settling the company’s debts.
Saruchera said they were now working towards the operationalisation of Zim Alloys, which will see the re-building of blast furnaces and construction of other washing and smelting plants.
“We unveiled the new investor to our creditors last week and we are happy to announce that the deal has been approved. The investor is now moving in and will soon resume operations at Zim Alloys.
“However, the blast furnaces are expected to be refurbished to become full operational within a period of up to 18 months. In the meantime the investor will also settle the company’s debt while at the same time setting up other small smelting plants,” he said.
Balasore has committed itself to settling Zim Alloys’ $50 million debt owed to creditors. It has also planned to revive the furnaces, refurbish smelters, construct mortal recovery plants and washing plants at Zim Alloys.
“The company will re-engage its former employees and will also employ more people as it grows and increase production,” Saruchera said.
Balasore is part of the renowned Ispat group of companies, a major business house in India, promoted by the Mittals. The group’s companies are spread across six countries including Libya, Bosnia, Philippines, Azerbaijan and Uzbekistan.
The other group of companies in India are Ispat Industries Limited, Ispat Metallics India, Ispat Profiles India, Gontermann Peipers India.
Zim Alloys is working on their dump, which is inclusive of one commissioned in 2013 in a partnership with a Chinese firm, JinAn in a deal worth about $2,3 million.
Benscore, which is owned by business mogul Farai Rwodzi, acquired Zim Alloys from Anglo-American Company in 2005 before downscaling production and switching off its blast furnaces and started processing its dumps.
The former Anglo-American Plc ferrochrome producer, which stopped operations in 2008 was placed under provisional judicial management on July 24, 2014.
The company was then put under final judicial management in November the same year after the ferrochrome producer’s debt had risen to alarming levels.
However, bad debt-buying company, Zimbabwe Asset Management Company in 2016 agreed to take over $21 million worth of the group’s non-performing loans, which are sitting with a number of local financial institutions in a bid to clean the company’s balance sheet.