Harare: Essar Group will take over Zimbabwe’s state-owned Zisco steel in a $750-million deal to revive production at the defunct firm that was once one of Africa’s largest producers, a minister said.
“The initial investment will be $750 million. The agreement also provides for the clearing of all outstanding arrears to wages and salaries,” industry minister Welshman Ncube said after the signing ceremony.
“Zisco is a stressed company. It is totally, completely insolvent. It has debts in excess of $340 million,” Ncube said, adding that the firm’s value was estimated at only $40-45 million.
After years of limping operations, the company shut down in 2008 at the height of Zimbabwe’s economic collapse.
The firm still owes employees $20 million dollars in wages.
Under the deal, Essar will take a 54% stake in the company, Ncube said.
Ravi Ruia, vice chairman of Essar, said reviving Zisco will not be easy after three years in mothballs.
“We intend to restore Zisco to its former glory,” he said.
Ruia said the company planned to begin producing steel within 15 months.
Once one of Africa’s leading steel producers with capacity to produce up to one million tonnes a year, Zisco collapsed due to a lack of funding during the economic crisis that ravaged the country with staggering hyperinflation.
Africa Essar Holdings is part of the multinational company Essar Group, a global steel producer with operations in more than 20 countries.
Zimbabwe President Robert Mugabe in May rejected bids for Zisco by ArcelorMittal and Jindal Steel and Power, complaining the two companies were too big.