[miningmx.com] — It is unclear whether ArcelorMittal South Africa, the South African arm of the world’s largest steel producer, will re-bid for a stake in Zimbabwean Iron and Steel Company (Zisco).
This follows a move by India’s Jindal Steel & Power to re-bid for a 60% interest in Zisco.
“We have no comment,” AMSA said in response to questions over its interest in re-biding for what was once the largest integrated steel works in sub-Saharan Africa north of the Limpopo.
AMSA and Jindal were shortlisted by the Zimbabwean government to take up a
majority stake in Zisco but both companies were later informed that their bids had
failed.
At the time the Zimbabwean government mouthpiece, The Herald said the
government rejected the bids to acquire part of state shareholding “on grounds that the conglomerates were too big for investment into a company like Zisco”.
But the government has since invited the companies to re-tender.
Local media speculated that the invitation to re-tender might have been spurred by the realisation that the medium-sized investors the government could have been favouring would not have the capacity to raise the huge capital resources needed to retire Zisco’s debts and recapitalise its operations.
Zisco, which is 89% government owned, is being privatised in a bid to revive the steel maker’s fortunes.
Zimbabwe’s largest steelworks, Zisco has debt of around US$228m but the
debt appears to be scarring away potential investors.
The Zimbabwean this week quoted Zimbabwe’s Industry and Commerce, Industry and Commerce minister Welshman Ncube as saying unless there were proper ways for getting rid of the debt, efforts to revive operations would not succeed.
“The only viable option for Zisco will be to find a partner to inject money to clear the debt. We need to get rid of the debt if other options that we have are to work,” Ncube told the country’s Parliamentary Portfolio Committee.
Jindal is wary of the same issue and for that reason has made its offer subject to the Zimbabwe government clearing all outstanding liabilities of Zisco.
The steel plant stopped operations in 2008 following the global slowdown.
Apart from the steelworks, Zisco mines its own iron ore at the Ripple Creek Mine in Buchwa and extracts limestone from a quarry close to the company’s Redcliff steel works.
It is believed that both AMSA and Jindal were drawn to Zisco because it owns iron ore reserves of 100 million tonnes and 60 million tonnes in limestone reserves.
While none of the companies ever divulged the value of their bids, the stake is
believed to be worth about $200m.
