Essar Africa Holdings Limited is reported to have committed an investment of approximately USD 750 million into, among other things, relieving ZISCO of its liabilities. This, as reported, forms the basis of the ZISCO Essar deal.
Media reports further state two new entities would be created, NewZim Steel (Pvt) Limited and NewZim Minerals (Pvt) Limited. These, we are told, will be owned 40%-60% and 20%-80% by the government of Zimbabwe and EAHL respectively.
This transaction violates the indigenization laws of the land, but with good reason, many Zimbabweans would not have bothered much as long as it furthered their interests in a transparent and beneficial manner.
The government has been progressive in private public sector partnerships lately. We see the indigenization of the diamond sector set to bring about USD 600 million into government coffers in 2012. Similar initiatives in the mining of platinum and indeed localization of the smelting will surely bring immense benefit to Zimbabweans.
Gone are the times when the International Monetary Fund and World Bank hood winked resource rich third world countries into giving up their resources almost for nothing to developed countries under the false pretence of being progressive.
As such, every transaction of national importance involving mineral resources should be given proper and due consideration to ensure interests of Zimbabweans and future generations are safeguarded to avoid any potential prejudice.
The fact ZISCO has been lying idle for a long time should never be used as an excuse to deprive Zimbabweans of their right to fair disposal of the underlying assets.
Three key aspects are very important about the deal. Firstly, the deal is the biggest disposal ever concluded by the State post independence.
Secondly, it was negotiated at a time when the government had full knowledge of various indigenization initiatives underway in the mining sector.
Thirdly, ZISCO assets are largely national assets that serve the very broad interests of Zimbabweans while being represented at the shareholding level by the State.
Given the above submissions, the disposal of any government shareholding in ZISCO, more so a majority shareholding, should be systematic and transparent to ensure interests of all stakeholders are appropriately safeguarded.
Indeed there should be a deliberate effort by (Industry and Commerce) minister Welshman Ncube, to make public all key elements of the transaction so Zimbabweans can, with full information, adjudicate if indeed their interests have been safeguarded.
From a casual analysis, Essar, with their massive experience in the steel business, definitely knew what they were buying into by assuming significant shareholding in NZM and splashing USD 750 million into the deal.
There are media reports that a 260 kilometers long slurry pipeline would be built from Chivhu to Mozambique to pump iron ore. There is potential prejudice to Zimbabweans in terms of loss in value added tax, corporate tax and pay as you earn running into hundreds of millions of dollars every year if this is allowed to be an integral part of the transaction.
(Sourced from www.newsday.co.zw)
