Staff Reporter
The Kuvimba Mining House reportedly emerged the preferred mining investor for the Zimbabwe Iron and Steel Company (ZISCO) following a thorough technical and financial assessment by the Zimbabwe Investment Development Agency (ZIDA), a close source to the development has revealed.
Six companies expressed interest in ZISCO Steel, but four were shortlisted. The six include Kuimba Mining House, Mhare Resources (Pvt) Ltd, PAI Capital, Epikaizo Capital (Pvt) Ltd, Sebeuzani (Pvt) Ltd and Africa Ferric Industrial Company (AFRIC).
According to the source, Kuvimba’s strategic plan was well received by ZIDA. The Mining Company submitted that it would invest a total of US$1.3 billion into ZISCO over a period of three years as initial working capital and capital expenditure. It is also expecting to generate about US$270 million in year one and will re-invest the money into the Iron and Steel plant.
The source revealed that AFRIC was disqualified because it tendered its bids late, while Mhare failed to make their presentations to ZIDA. PAI was not considered because it was new in the mining industry and lacked the necessary experience needed though it had promised to partner with experienced companies.
Epikaizo reportedly failed to satisfactorily explain to ZIDA how they were going to raise US$3 billion they said they would inject into ZISCO. Epikaizo and Sebeuzani tendered a joint bid.
According to the source, ZISCO requested for the due diligence to be done focusing on financial capability and technical capacity of interested companies. It also focussed on the interested companies’ abilities to mobilise capital and capacity and readiness to assume or deal with the ZISCO legacy debt of US$402 million plus the current US$3 million debt. ZISCO also wanted a company which demonstrated technical capacity and the ability to develop linkages between ZISCO and other downstream industries.
ZISCO stopped operations in 2008 due to poor management and lack of capital to recapitalise.
With its furnaces having capacity to produce up to one million tonnes annually, the company was among Zimbabwe’s major foreign currency earners.
ZISCO has been a subject of foreign investor interest in the past. Essar Africa Holdings, a unit of India’s Essar Group, had agreed to invest in ZISCO in 2011 during the era of the inclusive Government, but the deal collapsed in 2015. This was after a similar deal with another Indian firm, Global Steel Holdings failed to materialise in 2007.
The other international companies that once showed interest in ZISCO include Arcelor Mittal, South Africa, a unit of the world’s biggest steel maker.
In October 2019, the Government of Zimbabwe launched the US$12 Billion Economy by 2023 as part of the broader macroeconomic roadmap towards an Upper Middle-Income Economy by 2030. The US$12 billion mining industry represents a 344% increase from the US$2.7 billion registered in 2017. The multi-billion-dollar industry will be driven by gold, platinum, diamond, chrome, iron ore, coal, lithium, and other minerals.
