7 June 2012

Zimbabwe Alloys Secures US$60 Million Loan

Zimbabwe Alloys Ltd, the country's second largest ferrochrome producer, has secured US$60 million loan from Global Emerging Markets to rebuild its three furnaces, an official said yesterday. The reconstruction of the furnaces in Gweru -- about 275 kilometres west of Harare - has started, ZimAlloys chairman Mr Farai Rwodzi said in an interview. It will take up to 12 months for the refurbishment programme to be completed.

"The US$60 million will be used to pay off debts and reconstruction of furnaces," said Mr Rwodzi. "Of four furnaces that we have, one is working and we have started reconstructing the other three furnaces with a production capacity of 115 000 tonnes per year."

ZimAlloys will repay the loan through the sale of chrome concentrate, briquettes and ferrochrome. Government has banned the export of raw chrome, which includes concentrate and briquettes, but ZimAlloys has since requested for permission to export the products.

"While we appreciate the Government's position on stopping the exports on unbeneficiated chrome ore, we would seek your permission to export chrome concentrate and briquettes," finance manager Mr Munyaradzi Dube wrote to the Mines and Mining Development Ministry in February.

Zimbabwe has the second largest chrome deposits after South Africa and ZimAlloys holds 30 percent of the country's chrome reserves.

Early this year, ZimAlloys was forced to stop mining due to lack of working capital coupled with rising stockpiles of chromite ore after the Government imposed a ban on exports of unprocessed chrome ore.

ZimAlloys is 88 percent owned by local company Benscore Investment, which bought the equity from Anglo American Corporation of Zimbabwe in 2005. The other 12 percent shareholder is Cometal SA of Spain. The company has capacity to directly employ about 1 000 people and 5 000 people downstream.

Once the current reconstruction is completed, ZimAlloys will aim to increase production to 250 000 tonnes per annum, according to Mr Dube.

Since 2005, ZimAlloys shareholders have invested about US$30 million into the business.

About three months ago, GEM invested about US$55 million in RioZim, a diversified listed resource firm.

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