Financial Gazette (Harare)
Dumisani Ndlela
13 November 2009
Harare — INDIA'S Jindal Steel & Power Limited (JSPL) has emerged as one of two firms shortlisted for the purchase of a 60 percent stake in Zimbabwe's steelmaker, the Zimbabwe Iron and Steel Company (ZISCO), in an acquisition opportunity that could define Zimbabwe's privatisation programme.
The other bidder is South Africa's ArcelorMittal SA, part of Lakshmi Mittal's ArcelorMittal headquartered in Luxembourg.
Jindal's bid is backed by South Africa's Industrial Dev-elopment Corporation (IDC), with the Dev-elopment Bank of South Africa (DBSA) said to be on the wings as a financing associate.
Although pundits were tipping ArcelorMittal SA, part of a group that is currently the world's largest steel company, and is also the market leader in automotive, construction, household appliances and packaging, it was clear Jindal cannot be ruled out from staging an upset against the steel giant as it has what is being viewed as technical leverage due to its working relationship with South Africa's IDC, DBSA, the Zimbabwe government and its agents.
IDC's executive dir-ector, Ufikile Khumalo, said this week that IDC had a massive pipeline of possible investments in Zimbabwe, with particular interest in industries like steel.
Besides, the close involvement of DBSA was likely to give Jindal an advantage as government had later on included a provision related to the management of a US$300 million debt owed by ZISCO to several domestic and offshore creditors.
Jindal, which will control a 51 percent stake in the acquisition vehicle, with the balance to be held by IDC, is a new comer on the continent and had therefore carefully chosen its partners in its bid for leverage.
JSPL already owns one of the largest iron ore mines in the world, the El Mutun in Bolivia.
The Zimbabwe government controls Zisco with an 89 percent stake. The balance is held between Lan-cashire Steel, Stewart & Lloyds and Ta-nganyika Investments.
Nonkululeko Nyembezi-Heita, ArcelorMittal SA's chief executive officer, has said the acquisition of Zisco would allow ArcelorMittal SA to access landlocked s-outhern African countries and give the group exposure to the reconstruction of Z-imbabwe.
Other companies that had reportedly bid for ZISCO include Kwekwe-based SteelMakers Zimbabwe, which la-unched a joint bid with India's Sunflag Iron & Steel Company, China's Metallurgical Construction Com-pany, Murray and Roberts (South Africa), and Reclamation (S-outh Africa), which won the right to mine the disputed Marange diamond fields.
ZISCO, once one of Africa's largest integrated steelworks, controls iron ore mining and beneficiation in Zimbabwe.
It also owns the Ripple Creek mine, which provides iron ore and limestone to ZISCO's steelworks situated in the town of Redcliff in central Zimbabwe.
Zisco stopped operations last year after failing to secure cash for the refurbishment of its worn-out plants.
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