Ramotswa Steel's hopes of getting a rescue package from its Zimbabwean holding company, Ziscosteel, look increasingly bleak after the parent company admitted it is technically insolvent.

Ziscosteel chief executive officer, Alois Gowo, said the steel manufacturing giant is saddled with large debts of about US$18.5 million.

Ziscosteel completely stopped production in January last year, after years of operating at far below capacity. So desperate is the situation that the company has been meeting some of its obligations like paying workers' salaries through the sale of sundry items and by-products.

Briefing President Robert Mugabe during his tour of Ziscosteel's plant in Redcliff in central Zimbabwe last week, Gowo said the company needs US$78 million over a period of 12 months to operate viably.

"The challenges confronting the company are enormous and require a courageous management team to face them. But courage alone will not assist without an injection of the requisite resources in an enabling environment," Gowo said.

He said capital projects need US$54 million. Some of the capital projects include completion of the relining of No.4 Blast Furnace, repairs to the coke oven battery No. 3 and the refurbishment of rolling mills and steel plant and the recapitalisation of Buchwa Iron Mining Company (BIMCO).

The revelations by Gowo on the technical insolvency of Ziscosteel some three months after the parent company indicated that it was trying to rescue its troubled subsidiary.

In January, Gowo said while Ziscosteel is also almost not operating because of the breakdown of one of its major blast furnaces and pressing viability problems afflicting most Zimbabwean companies, it is busy scouting for a package for Ramotswa.

Gowo said then that Ramotswa had hit hard times partly because it had not been getting steel from Ziscosteel, a Zimbabwean government para-statal. Ziscosteel was once one of Africa's biggest iron and steel companies.

Ramotswa Steel ceased operating in September last year.

Ramotswa is one of Ziscosteel's seven subsidiaries. Others are Lancashire Steel and BIMCO and an associate company ZIMCHEM Refineries, which refines Ziscosteel's coking plant by-products into industrial chemicals.

Ramotswa Steel, Kabwe Steel and Monarch Steel in Zambia and the Ziscosteel Distribution Centre and Concord Steel both in South Africa are the others.

Gowo told President Mugabe that all the regional subsidiary companies are indebted to the tune of US$5 million and some creditors have instituted legal action against them.

"Creditors are instituting action against them with the possibility of these subsidiaries being taken over if the parent company does not step in to rescue them," he said.

He added that Ziscosteel has lost 1,006 workers since 2007 because of the general hostile economic environment, which has compromised the company's ability to pay competitive salaries.