29 December 2012

Zimbabwe: New Team to Review Essar Deal

GOVERNMENT has set up a committee to handle the paperwork on the sticky issue of iron claims ahead of the projected start of operations at NewZim Steel in January, Industry and Commerce Minister, Professor Welshman Ncube has said.

Prof Ncube said the committee, comprising officials from Essar Holdings, Ministry of Mines and Mining Development and from his ministry, would meet in the first two weeks of January.

"The issue of claims needs to be addressed urgently as we are now at implementation stage.

"We have agreed that we will have a meeting between Essar, our colleagues and ourselves in the Ministry of Mines and Mining Development to finalise all the issues to do with joint exploration and the transfer of mining rights to NewZim Minerals.

"We are hoping that everything will be in place by early January and the committee will do the paperwork."

Prof Ncube said the team could have met earlier to facilitate the swift resumption of operations at the Redcliff-based giant steel company, were it not for the festive season holidays.

He said Government had put in place mechanisms to ensure the project springs to life.

"We have put in place a Cabinet team to monitor the process. The team will be playing a supervisory role. I hope all ministries will co-operate this time and allow operations to commence.

"We could have facilitated the meetings to start this month, but everyone is on holiday. We are hoping, however, to move swiftly once the holidays are over."

The minister expressed hope that Essar and Ziscosteel paid the NewZim Steel workers part of their December salaries following an understanding that was undertaken.

He acknowledged that things were not yet running smoothly at NewZim Steel, although he remained optimistic.

"The workers were supposed to be paid 50 percent of their December salaries. That was the understanding between Essar and Ziscosteel. Ziscosteel was supposed to meet 25 percent of the salaries while the other 25 percent was to come from Essar. We, however, expect things to have normalised once operations start in January next year," said Prof Ncube.

The Redcliff-based company owes its workers over US$12 million, a debt it inherited from Ziscosteel.

News that operations at NewZim Steel could resume in January brings relief to the over 3 000 workers, who have gone for many months without salaries, after the investor suspended payments in March this year.

NewZim Steel had previously hit a brickwall, making many false starts owing to misunderstandings over the control of the vast iron ore claims.

According to the original deal, Essar Group would take 53 percent of NewZim Steel (former Ziscosteel-manufacturing arm) and 80 percent of NewZim Minerals (former Buchwa Iron Mining Company, mining arm) while the Government takes the remaining shares in both firms.

Prof Ncube said the Essar Group requested a Cabinet guarantee that there would be no changes to the original deal signed between the Government and Essar last year.

Mines and Mining Development Minister Dr Obert Mpofu once said the deal was supposed to be revisited because Essar Group would pay only US$700 million for resources worth over US$30 billion.

He told a Parliamentary Committee that iron ore reserves in Mwanesi near Chivhu, which are supposed to be controlled by Essar Group under the agreement, had a cumulative value of US$30 billion.

Government recently endorsed the implementation matrix that was agreed to with the Essar Group management.

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