Kwekwe, Zimbabwe — MININGREVIEW.COM — 04 August 2011 – Indian conglomerate Essar has announced that it plans to spend up to US$4 billion on the construction of a plant to process iron ore from Zimbabwe’s Mwanesi resource within the next five years.

Reuters reports that this would be the largest single foreign investment into Zimbabwe’s troubled economy, and would equal about two-thirds of the country’s estimated GDP.

Making the announcement here, industry and commerce minister Welshman Ncube said the new plant would process 25Mt of low grade ore annually and create 500 jobs in a country with an unemployment rate of more than 85%. It is the latest drive by investors from emerging market giant India into Africa.

Rivals China and Brazil are also keen on investing in Africa’s resource sector, but western firms have been lukewarm to Zimbabwe in recent years because of the policies of the government of President Robert Mugabe, which include its current drive to have majority stakes of foreign mining houses turned over to local black investors.

The African unit of Essar Group agreed last November to buy 54% of the Zimbabwe Iron and Steel Company (ZISCO), with the government keeping 36% and 10% being owned by minority investors.

Essar went on to form a mining company, NewZim Minerals, in which it holds 80% and the government 20%, and it owns the Mwanesi iron ore resource in Chivhu, some 150km south of Harare.

“The creation of NewZim Minerals will see the development of the Mwanesi resource. It’s a vast resource which will provide iron ore for a 25Mtpa plant,” Ncube said at a ceremony here to launch Essar’s mining and steel units.