Harare, Zimbabwe — 28 March 2012 – Industrial giant Essar Global of India is to sink US$4 billion into Zimbabwe’s collapsed steel mining and beneficiation industry over the next 10 years through a capital injection into NewZim Steel “’ a joint venture partnership with the Zimbabwean government.
Miningmx reports that Essar owns about 54% in NewZim Steel, formerly the Zimbabwe Iron and Steel Company (Zisco), and also controls another 80% of the Buchwa iron ore reserves.
Essar and the government of Zimbabwe agreed in August last year to set up the two joint venture companies that will acquire all the steel and mining-related assets and liabilities of Zisco and its subsidiaries.
Essar’s resident director for Africa, Middle East and Turkey, Firdhose Coovadia, told an investment conference here that most of the capital would be used to expedite the rehabilitation of NewZim Steel’s plant in Zimbabwe’s Midlands region. Essar also planned to construct a beneficiation and electricity plant, and to venture into exploration for new iron ore reserves.
“We will invest US$1billion in a steel plant to achieve annual production of 1.2Mt and US$3 billion to create a world-class beneficiation plant and a separate power plant,” said Coovadia.
Essar appears not to be too concerned about Zimbabwe’s indigenisation policy, which has adversely affected some investors in the country. Coovadia said “there has been a meeting of minds with the current coalition government.”
Essar has been shown leniency by being allowed to own a 54% stake, despite Zimbabwe’s contentious empowerment policies which state that foreign mining companies should not own more than 49% in local operations.
Zimbabwean finance minister Tendai Biti said there had been a misunderstanding of the country’s indigenisation policy and its regulations. He said the 51% benchmark was “an aspiratory target and not a mandatory target”.
Biti added that the law “is not about expropriation”, as it states that whatever “shares or assets” that must be ceded have to be “paid for at value”.
“What we understand is that mineral resources have become an issue of national pride and ownership, and we want government to be able to monetise these resources through our investment,” said Coovadia.
Essar has also applied for an independent power producer (IPP) licence to set up a thermal power station at Hwange, which has vast coal deposits.
Source: Miningmx. For further details click here.