Essar group has entered into an agreement with the government of Zimbabwe for the revival of Zimbabwe Iron and Steel Company (ZISCO).
Essar Africa Holdings Limited (EAHL), a privately held company of the Essar group, will inject an initial $750 million to restart production at Zimbabwe's state-run steel firm.
"Essar will complete all work in regard to resuscitation of Zisco. The initial investment for this phase will amount to $750 million," Zimbabwe's industry and commerce minister Welshman Ncube said at the signing ceremony on Wednesday.
Under the agreement, Essar Africa Holdings and the government of Zimbabwe will set up two joint venture companies that will acquire all the steel and mining related assets and liabilities, respectively, of ZISCO and its subsidiaries, and EAHL will further release the government from its guaranteed obligations under the ZISCO debt.
The steel JV will be owned 60 per cent by Essar and 40 per cent by the Zimbabwe government while the minerals JV will be owned 80 per cent by Essar and 20 per cent by the Zimbabwe government.
The transaction will close upon facilitation of various approvals, including approvals from the enabling ministries and an acceptable settlement of the government guaranteed debt obligations of ZISCO. Upon closing, EAHL and the Zimbabwe government will also finalise and settle liabilities such as unpaid wages and salaries and amounts due to various local creditors, etc.