It is reported that Essar estimates a capital expenditure of USD 388.042 million to revive operations of the ZISCO integrated steel plant, in a program that will be conducted over two phases over a period of four years, business digest has established.
According to a revival plan of the local giant steelworks, which is in possession of business digest, the first phase, which is expected to be complete within 18 months, will see capacity rising to 500,000 tonnes per annum. Phase 2, which has a 30 month duration, will increase capacity to an annualized one million tonnes, which is the installed capacity of the plant.
Most of the repair jobs have already gone to tender. Among the major works for coke ovens battery 1, 2 and 3, Fosbel, an international company which specializes in furnace refractory maintenance services, offered USD 45,540 for full heating wall repair, complete re lining of the chimney and refurbishment of pusher doors with relining.
The group also has to deal with USD 361 million in liabilities, which were showing on the books in the period to June 30th 2011. Breaking down the liabilities, USD 270 million is in long and medium term loans divided between ZISCO at USD 231 million and USD 39 million for Bimco. Payroll creditors amounted to USD 4.8 million largely made up of creditors from ZISCO.
CBZ Bank is owed USD 2 million by ZISCO. CBZ has received criticism from the market for having a huge percentage of bad loans. The group will require total manpower of 2,232, 1,780 of which would be contractual while there will be 96 expatriates from India.
However, according to industry and commerce minister Mr Welshman Ncube, red tape in the mines ministry around transferring claims to the newly created companies like New Zim Steel and New Zim Minerals are slowing down the Essar deal.
Mr Ncube said that small administrative issues were hindering the resumption of work at the New ZimSteel, formerly Ziscosteel and New Zimminerals, formerly Buchwa Iron Mining Company.
He added that "I admit we could have moved faster on implementation, but what is left are only administrative issues, not what has been written by the media." He said by November 16th 2011, certificates of the claims with the new names of the companies should have been signed and made available.
He indicated that in any transaction that requires the formation of two new companies, there would be legal issues around transfer of title and assets among other issues. Mr Ncube said that given that ZISCO and its predecessor company are more than 60 years old, some of the paperwork, be it at the Mines ministry, needed to be brought out and assimilated into new consolidated certificates of title and these take a lot of procedural work and time. New ZimSteel was launched and officially unveiled on August 3rd 2011.
Mr Ncube said the mines and transport ministries were yet to guarantee Essar's mineral rights owned by Bimco and reliable railway facilities as well as a decision on the fate of workers. Essar plans to lift production at New ZimSteel up to 14 million tonnes a year from peak production levels of close to a million tonnes of steel a year.
Essar acquired a 54% stake in Ziscosteel from government in a USD 750 million deal last year. According to the deal, Essar shall retain as much as possible of the current ZISCO staff. In selection of new staff, Essar shall consider existing ZISCO employees, subject to their qualifications, knowledge, skills, experience, and personal merit.
The sell off diluted government' shareholding in the steelmaker to 35,6%, but left untouched minority interests held by Louth Mineral South Africa (3%), Tonexon Investments (2.79%), Lancashire Steel (1.76%), Stewards & Lloyds (1.76%), Franconian Investments (0.81%), Amzim Iron & Steel Limited (0.75%) and Zambia Copperbelt Investment (0.13%).
(Sourced from www.theindependent.co.zw)
