Harare — GOVERNMENT has rejected Arcelor Mittal and Gateway Zimbabwe's bids to acquire part of State shareholding in the Zimbabwe Iron and Steel Company on grounds that the conglomerates were too big for investment into a company like Zisco.

This re-ignites the race for acquisition of the Zisco stake after the Government indicated that it would consider suitable potential investors among the six who had initially shown interest.

Arcelor Mittal and Gateway had been shortlisted for part acquisition of the State's 70 percent stake in Zisco, but the bids were rejected as it was felt they would not serve national interests.

This could have largely been influenced by the precedent set in 2004 when a massive US$400 million deal with Global Steel Holdings Steel of India collapsed under unclear circumstances.

The latest development could put paid to prospects for a quick turnaround of the ailing steel giant and the possible clearance of its more than US$300 million domestic and international debt.

Some of the creditors include KFW of Germany owed 74 million euro, and three foreign banks and Sinosure owed a combined total of US$94 million.

The Government had indicated that capacity to retire Zisco's huge debilitating debt would be used as one of the major criterion for selection of the eventual winner of the coveted stake.

Industry and Commerce Minister Welshman Ncube confirmed that the bids were rejected outright by the Presidency, as it was felt huge conglomerates have a tendency to dictate terms to their advantage.

"The recommendations made by the technical team on the bidders who had put bids were not accepted by the Presidency. Some of the companies were from South Africa and some are international conglomerates like Arcelor Mittal," said Minister Ncube.

He, however, indicated that the Government would, in two weeks, make a decision on the way forward with regard to a partner for Zisco.

Initially, the bidding race included Arcelor Mittal (South Africa), Murray & Roberts of South Africa, Reclamation (South Africa) Steel Makers, Gateway (Zimbabwe) and Jindhal Steel (India).

Minister Ncube said the Government would reconsider some of the initial bidders for acquisition of the Zisco stake to identify a suitable partner to resuscitate the giant steel manufacturer.

At its peak, Zisco had capacity to produce up to 1 million tonnes of steel on a yearly basis and employed thousands of workers.

However, due to capitalisation problems, the steel producer saw capacity utilisation dropped to about 10 percent before the firm stopped producing and had been surviving on selling scrap metal.

The revival of Zisco to its former glory remains critical considering its strategic position in the economy in respect of employment and the supply of steel products, especially as the economy recovers.