Harare - A unit of India's Essar Group will invest an initial $750-million to restart production at Zimbabwe steel firm ZISCO, in one of the biggest foreign investments in the country, Zimbabwe's industry minister said.
Essar Africa Holdings last November agreed to buy 54 percent in Zimbabwe Iron and Steel Company (ZISCO), with the government keeping 36 percent and 10 percent owned by minority investors.
“Essar will complete all work in regards to resuscitation of Zisco. The initial investment for this phase will amount to $750-million,” Industry and Commerce Minister Welshman Ncube said at a ceremony on Wednesday, when the deal was officially signed.
ZISCO is the first privatisation under a power-sharing government formed in 2009 by bitter rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai.
The investment would come as a boost for a country struggling to attract foreign investment the government says is needed to fix the economy after a decade of decline and hyperinflation.
Once a major foreign currency earner, ZISCO is now saddled with about $240-million in debt, which Essar will take over.
Ncube later told journalists that Essar Africa would not pay for the shareholding in ZISCO, which he said had a value of $45 million.
The Zimbabwean minister said ZISCO, which shut in the last two years, is expected to produce 1 million tons of steel a year, which would be sold locally and the excess exported.
“Our intention is that in the next 10 to 15 months we start producing steel,” Ravi Ruia, Essar Group vice chairman told journalists.
The government has said ZISCO's privatisation is excluded from an empowerment law, which compels foreign-owned firms including mines and banks eventually to sell at least 51 percent shareholding to local blacks. Ruia said Essar would eventually want to build a power station to guarantee uninterrupted supply of electricity to the steel maker. - Reuters