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Zimbabwe seeks new investors for steel company

Looking for new investors ‘who would be interested in availing funds (equity/debt) to resuscitate’ the company.
Image: Bloomberg

Zimbabwe’s state-controlled iron and steel company ZISCO has invited new investors to help revive operations at the company that has been the target of interest from Indian and Chinese investors in the past, a company document seen by Reuters showed.

Essar Africa Holdings, a unit of India’s Essar Group, agreed to invest up to $4 billion in Zimbabwe Iron and Steel Company (ZISCO) in 2011 but the deal collapsed.

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An agreement by China’s R&F to invest $2 billion in 2017 also fell apart after Harare authorities sought to renegotiate the deal.

ZISCO acting chairman Martin Manuhwa said in a circular seen by Reuters on Tuesday that the firm was again looking for new investors “who would be interested in availing funds (equity/debt) to resuscitate” the company.

Interested investors should submit their expression of interest by April 30. Successful investors would then be invited to participate in the bidding process for the funding.

The successful investor would be expected to contract out at least 35% of engineering, procurement and construction business to locals, Manuhwa said.

ZISCO owns an iron ore mining unit with an installed capacity of 2.16 million tonnes of ore a year as well as a wire products company.

ZISCO is 89% owned by the government. In 2018, Zimbabwe’s parliament approved a bill that allowed the government to take over about $500 million of debt owed by ZISCO to local and foreign creditors.

Zimbabwe President Emmerson Mnangagwa, under pressure to deliver on his promise of jobs, has anchored a revival of Zimbabwe’s economy on boosting output from the mining sector.

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The government just needs 11% then its 100% transformed.

Go for it. Well done.

Both the Indian steel moguls and the Chinese have walked away ..? Seriously? These are apex predators. I don’t think the Crocodile and his crew will be inundated with applicants before 30 April. For anyone who is considering participating, I also know of an airline you may be able to pick up for a song.

The Rhodesian Iron and Steel company produced more than 257 000 tons of steel in 1957. Risco was an exporter of steel to Europe and the rest of Africa.

In 2008 Zisco produced 12 500 tons of steel… with a break even of 25 000 tons at that point in time. It’s blast furnaces have not been operational since 2000 and plant equipment is now obsolete.

You have to be really have been in a state of “coma” to invest in Zimbabwe.

They change the rules everyday. They change rules in their flavor.

Even the stock market was closed last year.

Are they asking for so-called WMC? If they are…what hypocrites.

98% owned by the Government is the problem in Zisco, in earlier years the CEO did not run Zisco but the political wing of Zanu pf that was so sussesfull in running the rest of the country may be it was one of the reasons the other partners pulled out it did not want to loose their money.

Do you want my 50 cents?

If the state has taken over the creditors debt,the cost of debt will REDUCE,and the rating of ZISCO,will improve,to lower the Financial risk,and thus,the financial charges of ZISCO (Explicit and Implicit financial costs)

Thereafter,a limited equity infusion can be made by the State,to reduce the leverage ratios.This will be enough to restructure the debt of bankers – to lower the cost of debt,and increase the tenor,and based on the revised business plan,introduce some convertible debt.

Once the above is done,then ZISCO can undertake an intensive cost cutting program,to reduce Marginal and Total Cost of Operations (for which,there are several case studies)

Y DOES ZISCO NEED AN INDIAN TO RUN ZISCO ? DOES THE NATION NOT HAVE THE COMPETENCE,TO RUN A STEEL MILL – AN INTEGRATED STEEL MILL ?

TODAY THERE IS A WAITING LIST,FOR STEEL – IN MONTHS !

IF INDIA LOCKS DOWN,STEEL PRICES WILL SHOOT UP,AS ALL INDIAN EXPORTS WILL STOP !

AT THIS TIME,Y DOES ZISCO NEED A FOREIGN MANAGER – ESPECIALLY, AN INDIAN ? CAN THE STATE NOT EVEN PLAN THE USE OF A FINANCIAL PACKAGE,TO REVIVE ZISCO ?

Then the state does not deserve a steel plant

Any new player will 1st ask to DEMERGE THE MINES INTO A SEPARATE COMPANY – WHICH WILL BE THE MINERAL COMPANY,AND KEEP THE STEEL OPERATIONS, IN A SEPARATE COMPANY.The player will EXPORT from the Mineral company on an UNDERINVOICED MODE or an UNDERSTATED QUANTITY NODE,to siphon money,from the mines and show some profit in the minerals company

In the steel company also,there will be underinvoicing, to siphon money and show losses in the steel company.Then the player will raise DEBT IN THE MINERALS COMPANY,and the use the interest on the Debt,to book losses in the mineral company also.

As losses are booked,in both the companies,the Credit risk will deteriorate,and cost of debt will rise.Then the player will ask the STATE,To allow him to merge the steel company,INTO THE minerals company, obtain tax waivers from the state,CDR from banks and VRS packages for staff.

Then the end game starts.The Player will tell the STATE,to DIVEST Its stake,in the merged entity,to the Player,and the Player will pay for the same,using the FUNDS SIPHONED OUT,from the UNDERSTATED/INVOICED EXPORTS,OF ORE AND STEEL.

Y WOULD THE STATE WANT A PLAYER,TO ENTER INTO ZISCO ? DOES THE STATE THINK THAT THE “NEW PLAYER” WILL USE HIS BALANCE SHEET AND CREDIT WORTH, TO RAISE CAPITAL FOR THE ZISCO EXPANSION ? That would be FOOLISH

The Only VIABLE REASON FOR THE STATE,IS THAT – it wants a FOREIGN PLAYER to revive ZISCO,so that, it can AGAIN MILK ZISCO, AND THAT FOREIGN PLAYER, AND INTERNATIONAL AID AGENCIES — TO LINE THE POCKETS OF THE POLITICIANS.dindooohindoo

End of comments.

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