1 February 2013

Zimbabwe: Essar Saga - Supreme Court Throws Out Mumbire's Ore Claims

ESSAR Africa Ltd's takeover of Ziscosteel, which was hanging in limbo following an appeal by businessman Rodreck Mumbire, who was challenging the transfer of some of the iron ore claims owned by Buchwa Iron Mining Company (Bimco) to Essar, will now proceed following a landmark ruling in favour of the government, businessdigest can reveal.

The Supreme Court, sitting in the capital on Tuesday this week, issued an order that could effectively pave the way for the closure of the outstanding Essar Africa-Ziscosteel transaction.

Deputy Chief Justice Luke Malaba, sitting with Justice Anne-Mary Gowora and Justice Yunus Omerjee heard the appeal arising out of a judgment by Justice Samuel Kudya in the High Court last year, which had effectively upheld the transfer of the BIMCO claims to Mumbire.

The Supreme Court agreed with the submissions made by Addington Chinake of Kantor & Immerman for the appellant -- Bimco -- the gazetting of a cancellation of Mumbire's claims on October 26 by the Minister of Mines had effectively determined the rights of the parties for the purposes of the appeal.

Consequently, the Supreme Court declined to write an academic Judgment on the point.

The effect of the judgment is summed up by Deputy Chief Justice Malaba who said that on October 26 the Minister of Mines had effectively determined the rights of the parties factually and with the consent of Buchwa's counsel, Chinake, and Advocate Lewis Uriri appearing for Mumbire and his company Bearable Prospects (Private) Limited ordered by consent that: "In light of the publication of Government Gazette, Vol XC No 60, General Notice 484 of 2012 dated October 26 2012 cancelling the claims in dispute: the appeal is hereby withdrawn; each party shall pay its own costs, both in this court and in court a quo."

The Supreme Court found that the gazetting of cancellation of the claims was final in the circumstances.

The legal proceedings instituted against the government, which have allegedly been frustrating efforts by Essar to conclude the take-over of Ziscosteel operations, were threatening to wreck the Essar deal.

According to reports carried in our sister paper, NewsDay, the transaction between the government and Essar Africa for the take-over of Ziscosteel could not be fully consummated because of legal challenges over the iron ore mining claims that are supposed to be transferred to the mining giant.

The deal, worth an estimated US$750 million, was sealed in March 2011, resulting in Ziscoteel being unbundled into two companies, NewZim Steel and NewZim Minerals.

Essar acquired 60% in NewZim Steel and it was also agreed that the Indian giant would acquire 80% of iron ore mining unit Bimco.

Bimco held the rights to iron ore claims for supply to Ziscosteel.

The reports said several people were claiming ownership of the claims, among them Mumbire.

The claims in dispute were cited as Leleza 1-15 registration no 12896 BM-12910BM and Berlena 1-15, registration numbers 12896 BM-12895 BM.

Essar has since expressed frustration as it has failed to commence operations more than a year after the deal was inked and has threatened to withdraw in protest over the government's failure to guarantee adequate iron ore supplies.

Contacted for comment, Industry and Commerce minister Welshman Ncube said the legal issue surrounding the mining claims had been one of the issues delaying the Essar deal.

"We are in the process of bringing finality to the issue and are hopeful that within the next few weeks there will be timelines for when everything will be completed," he said.

"Those are some of the things that have been delaying us on this deal but they fall under the jusridisction of the ministry of mines."

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