New Zim Minerals, which controls the iron ore reserves to be exploited by Essar Holdings, is owned 80% by the Indian firm and 20% by the government.
Industry and Trade Minister Dr Welshman Ncube confirmed that the make or break meeting would be held next week. He said that “The owners of Essar were supposed to come here this week but they have indicated that they will be here next week for the negotiations. It was agreed that we need to make a more equitable shareholding because the current 80% to 20% structure is more in their favor so we need to adjust it.”
Dr Ncube expressed optimism that negotiations would yield positive results to pave the way for resumption of work at the steelworks. He said that everybody is willing to come up with a mutually beneficial position for the parties, adding the deal was not in danger of collapse.
Meanwhile, Dr Ncube said Essar had reached an agreement with Government over outstanding issues of mining claims. He added that “As far as we know, they are happy with what they got from the Ministry of Mines and Mining Development.”
Essar acquired a 54% stake in the defunct steelmaker in March 2011 in a USD 750 million deal which included taking over ZISCO’s debts and liabilities.
However, Essar has rejected reserves offered by Government at Buchwa Mine in Zvishavane, saying they were too deep to exploit, while those at Ripple Creek in Redcliff were not sufficient to enable them to recoup their investment. Instead, the Indian firm wanted reserves at Mwenezi estimated to contain 30 billion tonnes of iron ore.
Once the biggest integrated steelworks in Africa, Ziscosteel stopped operations in 2008 as it choked under a USD 340 million debt and other viability problems.
Touted as the biggest investment Zimbabwe has clinched in years, the Essar deal is expected to bring back life to Redcliff which had become a ghost town and also improve the welfare of over 3500 workers left jobless after operations ground to a halt.
The Indian firm intends to invest over USD 4 billion over the next four years at New Zim Steel, including setting up a 600 MW thermal power plant to support the steelworks.