It is reported that the Essar Group's quest for iron ore remains elusive with Zimbabwe declining to supply the resource as envisaged in a contentious deal between the Indian conglomerate and the African state.
The Essar Group may have to renegotiate the terms of the contract if it wants to continue with its plans in the African nation.
Mr Gift Chimanikire mines and mining development deputy minister said that Zimbabwe won’t sell 90% of its iron ore resources to one company. He added that the provision in the current pact that allowed this was wrong. He added that "We have said to Essar: Do not expect us to hand over these resources. As government, we cannot just do that."
An Essar Group spokesman said that it was against company policy to comment on speculative reports. He added that "Essar continues to hold discussions with the Zimbabwe government over a number of issues relating to the ZISCO transaction, and we continue to make progress. However, we would not like to comment on any specific points."
Essar's deal to gain access to a captive source of iron ore has been caught in political crossfire ever since it was signed in early August 2011.
The Essar Group and Zimbabwe announced the launch of NewZim Steel Pvt Ltd and NewZim Minerals Pvt Ltd to revive ZISCO, committing a USD 850 million investment by Essar Africa with the promise of job creation. The shareholding structure in the two joint ventures was envisaged at 60:40 and 80:20, respectively.
Essar also committed to revive ZISCO to its original capacity and unveiled a plan to double annual capacity to 2.5 million tonnes.
NewZim Minerals was to undertake exploration and technology assessment, with a testing program commencing in the first 18 months. After this, depending on the outcome, it was to construct a large scale beneficiation project and related infrastructure for an estimated expenditure of USD 3.5 billion.
Beneficiation is a process in which low-grade iron ore is upgraded to higher iron content through concentration and elimination of impurities.
Some members of Zimbabwe’s coalition government have questioned the deal, even as the strife torn nation's President Mr Robert Mugabe has called for a general election in early 2012.
Industry and commerce minister Mr Welshman Ncube led negotiations when the deal was signed.
(Sourced from www.zimdiaspora.com)
