Government of Zimbabwe and Essar Announce New Steel and Mining Entity
OREANDA-NEWS. August 3, 2011. Government of
In accordance with the agreement entered into on 9 March 2011, EAHL has committed to an investment of approximately USD 750 million, which will include relieving GoZ and ZISCO of all its liabilities. This includes guaranteed foreign debt, historic liabilities in respect of trade and other creditors, (including unpaid salaries and associated benefits owed to the employees), fixed capital investment for reviving the plant to 1.2MTPA (million tonnes per annum) steel production and working capital requirements of the operations.
NewZim Steel
Subject to the conclusion of discussions with minority shareholders, NewZim Steel (NZS) will be owned 40% by GoZ and 60% by EAHL. This company will acquire the existing assets of ZISCO and will revive and expand ZISCO’s steelmaking capacity in two phases:
Phase 1: Refurbishment of the plant at an investment of USD 115 million to be completed in 12-18 months. This will deliver a production capacity of 0.5 MTPA.
Phase 2: Increase production capacity to 1.2 MTPA, including investment in a Greenfield multi-fuel cogeneration power plant of 50 MW and an oxygen plant at an incremental investment of USD 275 million. This is scheduled to be completed within three years.
In the long term, NZS has a vision to increase the capacity of the plant up to 2.5 MTPA.
Throughout the project’s lifespan, NZS will continuously evaluate market opportunities to introduce a wider range of products. In addition, every effort will be made during the development phases to support and encourage indigenous entrepreneurs and increase the range of steel products manufactured in
To ensure sustainable operations of NZS, EAHL will invest in the energy sector through investment in Munyati Power Station as well as investment in the country’s water infrastructure and upgrading of rail infrastructure. The proposed investment in the water sector will be in the areas of new pump stations, water supply pipelines and the possible construction of a new dam. This will not only benefit the operations of NZS and NZM but also serve the communities and businesses in Redcliff and Chivhu areas. The proposed investment in rail infrastructure will increase the capacity and reliability of the rail line between Hwange and Mutare, and will benefit the economy and in particular the mining and agricultural sectors. The amount and timing of such investments will be determined after feasibility studies undertaken jointly with the relevant line ministries/parastatals.
NewZim Minerals
Subject to the conclusion of discussions with minority shareholders, NewZim Minerals (NZM) will be owned 20% by the GoZ and 80% by EAHL. NZM will acquire 100% stake in BIMCO from ZISCO and will be tasked with the exploration and development of ZISCO’s mining assets including the Ripple Creek Iron Ore Mine in Redcliff, its limestone deposits and the Mwanesi Iron Ore Deposit. The priority of NZM will be to ensure sufficient supply of good quality iron ore to NZS for the life of its operations including the increased volumes required by any planned capacity expansions. The iron ore at Ripple Creek will be mined to feed NZS’ steel plant requirements in the short term. The Mwanesi deposit has been relatively unexplored to date and initial work indicates that it largely comprises of jasphalite ore, which is of average to poor grade, indispersed with hematite ore. EAHL will fund NZM for a full testing programme to establish the quantity and quality of the ore, including its beneficiation properties and the latest technologies which can be used for such beneficiation.
It is estimated that this exploration, technology assessment and testing programme will entail an investment of approximately USD 100 million in the first 18 months. Thereafter, depending on the outcome of the techno-economic feasibility report for the project, EAHL will provide the funding required for the construction of a large-scale beneficiation project and related infrastructure which is estimated to be in the region of USD 3.5 billion. The 20% equity stake of GoZ in NZM will be financed by EAHL and will represent an investment in a world class asset that will benefit the people and the economy of
The beneficiation process will convert raw ore into a product that can be marketed internationally. The value of the beneficiated ore will increase by 500% resulting in a higher value product from
“This project coming to fruition is evidence of how serious we are, as a unity Government, about restoring the past glory of
“We are pleased with the selection of Essar as a partner because of its commitment to the project and its track record in establishing Greenfield and Brownfield steel facilities, its experience in infrastructure development and the successful undertaking of large capital intensive projects,” concluded Prof. Ncube.
Mr Ravi Ruia, Vice Chairman, Essar Group, said, “This is a win-win transaction for both GoZ and Essar. We view this union as a long term partnership with
Essar is recognized as a responsible corporate citizen across the countries and communities in which it operates, and supports a wide variety of Corporate Social Responsibility (CSR) initiatives which help address community needs. The Group will endeavour to continue this trend in
Mr. Ruia added, “We have already committed to two funds of USD5 million each towards a) entrepreneurship and youth development and (b) women empowerment and are working closely with the Government to implement the initiatives in the best interest of the people of
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