Essar deal safe after general elections, says Ncube

Published: 16 July 2013

INDUSTRY and Commerce minister Welshman Ncube says government's steel production partnership with Essar Africa Holdings (Essar) will not be affected by a change in government ahead of general elections on July 31.

In an interview with businessdigest, Ncube said the investment was made by government and not individuals, assuring Essar that the foreign firms' investment was safe.

"The agreement was made by the entire inclusive government and if there is a change of government all the parties have a mandate to fulfil it," Ncube said.

"I don't foresee a situation where the new government is outside the three parties in the current inclusive government and in any case the agreement itself has been signed for even when we have a new government."

Ncube said bickering in the current inclusive government and fundamental differences delayed the full consummation of the US$750 million deal.

He specifically cited the ministry of Mines' delay to allocate ore rich claims to the new mining vehicle.

"The new company has land claims at Ripple Creek, Buchwa and a prospecting license at Mwanesi. The other two were secured from the ministry of Mines without difficulty, but the Mwanesi was a bit problematic."

In March 2011, government sealed the US$750 million deal with Essar resulting in Ziscosteel being unbundled into two companies, NewZim Steel and NewZim Minerals. The deal gave Essar 54% control of the new company New Zim Steel.

As part of the deal, Essar, was also awarded 80% ownership of NewZim Minerals with the government holding the remaining 20%.

It has, however, not been consummated due to haggling over iron ore deposits although cabinet made a series of resolutions on the issue.
- independent