Essar selected to revive Zimbabwe Iron & Steel Co
10 November 2010
Essar Africa Holdings Ltd, a privately-held company that is part of the Essar Group, has confirmed having been selected by the Zimbabwe government as the preferred bidder for the revival of the state-run Zimbabwe Iron and Steel Co, or Zisco, by way of purchase of government's 60 per cent equity interest, and it has been invited to finalise the terms and conditions to complete the transaction.
Essar Africa beat the world's largest steel company ArcelorMittal SA and India's Jindal Steel and Power Ltd to win the bid for reviving Zisco, as well as other companies in the fray like Sino Zimbabwe and Sovereign Capitala, a consortium of local and South African investors.
Along with JSPL, ArcelorMittal was also one of the frontrunners during the first bidding round in May. However, both companies were rejected based on same parameters and the process was called off.
Zisco, an integrated steel company with an annual capacity of 1 million tonnes, has been operating at low capacity levels for the last several years due to shortage of working capital and funds for maintenance and modernisation of plant and equipment.
''We believe Zisco is well positioned to be a low-cost steel producer that can meet the growing demands of the regional steel market and capitalize on the robust forecasted growth in sub-Saharan Africa,'' said Firdhose Coovadia, resident director, Essar (Middle East and Africa), in a statement.
According to industry sources, the entire cost of the transaction will be around $450-500 million, including equity plus debts. As part of its proposal, Essar will invest in the revival and expansion of Zisco and enhance its productivity by leveraging Essar's expertise in the steel sector, Zisco's existing infrastructure and availability of key raw materials including coal and iron ore.