Tuesday, 3 June 2014

Zimbabwe, India revive steel production deal

Zimbabwe is soon expected to boost its steel production following an agreement with an Indian firm to reopen the country’s biggest steel processing plant. NewZim Steel plant – formally Ziscosteel had been idle since 2011 mainly due to differences over ownership of mineral claims between the Zimbabwe Government and India’s Essar Group.

However, subsequent negotiations between Essar Group, which bought majority shares in the plant and the Zimbabwe Government have seen the two resolve their differences, and are now ready to resume operations at the processing plant.

Essar Group owns 54 percent in the NewZim Steel, while the Zimbabwe Government has 36 percent shareholding rights. The remaining10 percent is owned by other minority investors. According to the agreement announced in early May, Essar Group will among other things build a new 500,000 tonne steel plant over the next two years.

Under phase two of the project, production at the new steel plant is expected to increase to about 1.2 metric tonnes per year. The estimated cost of the proposed plant is US$650 million.

“After a significant review, we came to the conclusion that the plant will need a substantially new rebuild,” Essar Africa director, Firdhose Coovadia told a press conference.

The reopening of the plant will not only revive the local steel industry, but is also expected to create new employment, as well as benefit other downstream industries including transport and agriculture sectors.

According to the Zimbabwe Industry and Commerce Ministry, the country steel consumption is about 100, 000 tonnes a year. This therefore, means that the reopening of NewZim Steel plant will enable the country to rank in millions from exports.

Essar Group is a global steel producer. It began its steelmaking business by setting up India’s first sponge iron plant in Hazira, a coastal town in the western Indian state of Gujarat. The company went on to build a pellet plant in Visakhapatnam, and eventually a fully integrated steel plant in Hazira.


Post a Comment