A bid was submitted earlier this month, the person said, declining be identified because an official announcement hasn’t been made by the Zimbabwean government. Zimbabwe’s Finance Minister Tendai Biti declined to comment when contacted by phone yesterday.
Investing in Zimbabwe, where the economy shrank 40 percent between 2000 and 2007 according to the International Monetary Fund, would allow ArcelorMittal to supply steel more cheaply in the region by reducing trucking and rail costs. There are signs of a “nascent economic recovery” in Zimbabwe, the IMF said July 2.
“If you’re going to sell steel to Zambia, the Democratic Republic of Congo and so on then it is better to sell from Zimbabwe than from” South Africa, John Robertson, who runs the Robertson Economics research agency, said in an interview from Harare, Zimbabwe’s capital. “There will be much faster growth before long” in Zimbabwe, he added.
A successful bid would help to reverse an outflow of foreign investment from Zimbabwe over the last 10 years. London- based mining company Anglo American Plc has sold assets there, as have U.S. ketchup maker HJ Heinz Co. and U.K. platinum producer Lonmin Plc. London-based miner Rio Tinto Plc and South Africa’s Impala Platinum Holdings Ltd. have slowed investment at Zimbabwean mines.
Political Impasse Zimbabwe Iron’s sole plant is 875 kilometers (544 miles) north of Vanderbijlpark, ArcelorMittal’s closest mill to Zimbabwe. The plant was operating at 10 percent of its production capacity of about 1 million metric tons a year, the government-controlled Herald newspaper said in January last year.
Zimbabwe’s economic recovery hinges on the stability of an agreement between President Robert Mugabe and his political opponents that ended a decade-long impasse in February with the formation of a coalition government.
That coalition is being tested by delays to talks over a new constitution and a dispute between Mugabe’s Zimbabwe African National Union-Patriotic Front party and the Movement for Democratic Change over government posts including the central bank governor and attorney general.
A collapse could reverse economic gains since September last year when inflation peaked at an annual rate of almost 500 billion percent, according to the IMF.
“Investing in Zimbabwe is risky,” James Bennett, an analyst at UBS Securities in Johannesburg, said in an interview.
ArcelorMittal South Africa, which is 52 percent-owned by Luxembourg-based ArcelorMittal, is Africa’s biggest steelmaker, producing about 7 million tons a year.