The Zimbabwean government and Essar Africa Holdings have agreed on the commencement of operations under Phase One of the NewZim Steel project which will see the injection of US$650 million.
The agreement is set to pave way for the operationalisation of the NewZim Steel and New Zim Minerals in a move that is set to benefit the Redcliff community and the nation at large.
The initial phase of the project is set to see the investor injecting at least US$650 million dollars excluding liabilities and will result in the revival of the NewZim Steel to a production capacity of half a million tonnes per annum of liquid steel within 24 months.
Industry and Commerce Minister Mike Bimha described the joint venture as strategic, saying the operationalisation of the company is a significant development for the country.
“This agreement heralds a new chapter in the economic growth of Zimbabwe, for all the people of Zimbabwe and particularly the Redcliff community,” he said.
As part of the immediate interim measures, Lancashire Steel operations will be revived using imported feedstock.
On the other hand it has also been agreed that certain steel products will be imported for sale through the existing Zisco Steel distribution centres.
Essar capital director Firdhose Govavia said contractors have already been deployed to the site adding that phase one will involve engineering, construction and procurement work.
He said, “Chinese and Indian contractors have already been deployed to the site. We are glad that phase one will see the production of half a million tonnes of liquid steel.”
According to the investors, considerable time and effort has been spent in readjusting the revival process to ensure the steel plant is globally competitive.
The initial implementation phase will see the construction of a new blast furnace, line plant, an oxygen plant as well as a bar and rod mill.
Meanwhile, former Zisco workers who are being owed huge sums of money by their employer are set to get a financial relief following an agreement between the government and Essar Africa Holdings Limited.
NewZim Steel chairman Nyasha Makuvise said the details of the relief plan has already been communicated to the stakeholders adding that the process will begin next week and will be on an ongoing basis.
“Following a meeting with the shareholders held at Redcliff, it was agreed that employees get financial and other relief. This process will start next week,” he said.
According to details from the company, employee liabilities currently stand at US$110 million. The greater proportion of the liabilities is for the pension fund deficit.
Apart from the relief to workers, an agreement has also been reached for the investors to meet the creditors with a view to agreeing to modalities for the settlement of the obligations.
In terms of the foreign liabilities, a total of US$187 million is owed to a Germany firm, KFN, while a Chinese firm, Sino-Sure is owed US$59 million. ZBC
