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Zimbabwe: Chinese Firm Snaps Up Slice of Zimasco
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Financial Gazette (Harare)
26 September 2007
Posted to the web 28 September 2007
Rangarirai Mberi
Harare
SINOSTEEL, China's second largest iron dealer, is to buy into the Zimbabwe Mining and Smelting Company (Zimasco), the country's largest ferrochrome producer.
It is not yet certain how much of Zimasco Sinosteel is ready to buy, or how much it intends to pay for the stake.
However, Sinosteel said this week it had already signed an "initial agreement" with Zimasco Consolidated Enterprises (ZCE), the Mauritius based holding company of Zimasco, paving the way for an acquisition the Chinese company said would "benefit the trade cooperation between the two countries, and help local economic development, create employment opportunities, and promote social stability in Zimbabwe".
The news came after Industry and Trade Minister Obert Mpofu traveled earlier this month to China to meet with officials there.
A spokesperson for Zimasco confirmed that an agreement, further to preliminary agreements signed between ZCE representatives and Sinosteel, had been reached last Wednesday. But it was suggested a deal might not be sealed immediately.
"It is important to note that the agreement is subject to certain conditions precedent, which may or may not be fulfilled. In addition, regulatory approvals from the authorities in China still have to be obtained. Therefore, until these processes have been completed, the shareholder portion of Zimasco Holdings (Pvt) Limited remains unchanged and all business will continue as usual." Zimasco's ownership has been the subject of controversy since 1997, when Emmerson Mnangagwa, then chairman of the National Investment Trust, blocked a bid by a consortium led by retired army general Solomon Mujuru for a controlling interest in the company.
Zimasco, once the world's fifth-largest ferrochrome producer, produces about 210 000 metric tonnes a year, or four percent of total world output.
Sinosteel's Zimasco bid extends China's growing interest in African metals, as the Asian giant looks to feed its booming economy. China is the world's largest steel maker and consumer.
Zimbabwe has the world's second largest reserves of chrome, after South Africa.
Sinosteel has already invested in ferrochrome and a smelter project in South Africa, in a joint venture with Samancor Chrome.
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Global ferrochrome demand is expected to rise by about 5 percent a year for the next few years, driven largely by China's economic growth, which has seen demand soar for stainless steel for infrastructure development and consumer products. Ferrochrome provides the hardness to stainless steel.
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