[miningmx.com] — Zimbabwe has rejected bids for the take-over of state steel maker ZISCO from ArcelorMittal’s South Africa and India’s Jindal Steel and Power in a move that could slow a drive to attract foreign investment.
The government had shortlisted the two firms, but Industry and Commerce Minister Welshman Ncube said President Robert Mugabe had rejected the two bids because the two companies were too big to invest in ZISCO.
“That is the feeling of the presidency, as strange as that might seem,” Ncube told Reuters.
“The feeling is that we are a small country and we will have problems with a big multilateral company. The thinking is that we need a medium-sized investor for ZISCO.”
An ArcelorMittal spokesman said: “We have been informed in writing.”
ArcelorMittal said in February this year it was hanging onto cash of R4.3bn to give it the firepower to conclude the possible acquisition of the Zimbabwean steel operation Zisco and make its first foray into iron ore production.
A decision from the Zimbabwean government was expected in December last year on the sale of the Zisco steel plant, which has a dedicated iron ore mine within 20km of the plant, ArcelorMittal CEO Nonkululeko Nyembezi-Heita told a media conference.
Zisco, which is 70% owned by the Zimbabwean government, would have given ArcelorMittal access to landlocked African countries.
On Thursday, Mugabe made a surprise showing at the World Economic Forum for Africa, the continent’s biggest business meeting, to appeal for investment alongside other members of the fractious coalition government.
RESTART BIDDING PROCESS
ZISCO has capacity to produce 1 million tonnes of steel per year and had been targeted to be the first state-run firm to be disposed, but the government’s decision is likely to put into question its readiness to welcome investors.
Ncube, a minister from a splinter Movement for Democratic Change (MDC) group, said the government would restart the bidding process, which should be concluded in three months.
“What is left for us is how to attract the medium-sized investors and this time we will have a truncated bidding process, not the one year it took us during the previous one, so that it can be completed within three months,” Ncube said.
He said ZISCO’s privatisation would not be affected by a controversial law forcing foreign-owned companies, including mines and banks, to sell 51 percent shareholding to locals.
The empowerment law has divided the unity government, with Mugabe defending it as necessary to redistribute wealth to the country’s poor while Tsvangirai says the rules would discourage foreign investment.
The new administration has estimated around $10 billion is needed to repair the economy but foreign investors are also reluctant to pledge funds without faster political reform.
ZISCO was once the largest integrated steelworks in the region and a major foreign currency earner for the then white Rhodesian government before independence in 1980.