As per local media, the ministry of Mines and Mining Development o Zimbabwe government has finally agreed to transfer iron ore claims to Essar, a move that would result in the Indian firm completing its takeover of Zisco.
The move comes after intense lobbying by cabinet on Monday to expedite the transaction, amid revelations that Essar was becoming impatient.
Mr Welshman Ncube, Industry and Commerce minister, told Standard Business said that Obert Mpofu’s ministry had written him a letter agreeing to transfer the iron claims, key for the completion of the deal. Mr Ncube said that “They wrote a letter to us. It has everything we wanted except three or four claims in Mwanezi, which they have not included in the letter adding that he had written another letter inquiring about the omission. They have invited Essar to come and have discussions on the condition for the renewal of the Special Grant.”
The special grant was issued in favour of Bimco, Zisco’s minerals arm, but had expired. It allows exploration to take place in an area covering 41 000 hectares.
The transfer of the iron ore claims was the outstanding issue and a condition precedent in the finalization of the deal.
The claims are held by Zisco and Bimco. These include Buchwa, Ripple Creek and Mwanezi.
Claims at Buchwa Mine, even though existent on paper, had become useless as Zisco had stopped operating at Buchwa Mine a long time ago on the basis that the iron ore, although estimated at 30 million tonnes underground, was now too deep. It was no longer profitable to access the iron ore. The Ripple Creek claims in Kwekwe were being used by Zisco at the time it stopped producing in 2008.
Claims in Mwanezi are in two categories: Special grant issued in favour of Bimco and 20 other claims explored by Bimco in two different areas believed to have high-grade ore.
Initially, the ministry of Mines wanted to transfer Buchwa and Ripple Creek claims, but was not prepared to renew the special grant in Mwanezi, saying anyone interested should approach the ministry.
However, the ministry of Industry argued that iron ore at Ripple Creek was of low-grade because it had 54% iron content. During the due diligence exercise, engineers told Ncube’s ministry that to successfully revive Zisco and use blast furnace number four, the iron content generally accepted, had to be between 64% and 74%.
Essar won the right for Zisco’s controlling stake last year after agreeing to take over the troubled steel maker’s foreign debt of over USD 400 million.
The transaction would result in the creation of two companies, New Zim Steel and New Zim Minerals (NZM), burying the ghost of Zisco.
Source - The Standard
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