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report of the Portfolio Committee on Industry and Commerce on the
agreement signed between the Government of Zimbabwe and Essar Africa
Holding Limited regarding New Zimbabwe Steel Limited
September 10, 2012
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Committee on Industry and Commerce conducted an inquiry into the
Agreement signed between the Government and Essar Africa Holdings
Limited (2011) regarding the Zimbabwe Iron and Steel Company (ZISCO),
now New Zimbabwe Steel Limited. At its peak ZISCO produced one million
tonnes of steel per annum and employed about four thousand people.
Thus, concerned about the delay in the resumption of operations
at this strategic entity in the revival of the country's economy,
the Committee was compelled to conduct the inquiry.
of the Committee's inquiry were as follows:
a) to find out
what was stalling the conclusion of the Agreement
b) to have an
appreciation of the provisions of the Agreement
c) to come up
with recommendations for the commencement of operations at New Zimbabwe
held oral evidence sessions with the following:
of Industry and Commerce
b) Essar Africa
of Mines and Mining Development
d) New Zimbabwe
Stee Workers' representatives
also considered the Agreement signed between the Government of Zimbabwe
and Essar Africa Holdings Limited to create New Zimbabwe Steel Limited
and New Zimbabwe Minerals.
Industry and Commerce
received oral evidence from the Ministry of Industry and Commerce
on the tender for ZISCO that has since been awarded to Essar Africa
Holdings , on the 17th of March 2011 and found out the following:
- The new
bidding process for the tender of ZISCO culminated in the signing
of an agreement between the Government of Zimbabwe and Essar Africa
Holdings Limited of Mauritius in March 2011.
- The Agreement
provides for a shares ownership structure of 54: 35:11 percent
for Essar Africa Holdings Limited, the Government of Zimbabwe
and Minority shareholders respectively. In addition to that, Essar
Africa Holdings Limited is required to inject an initial amount
of $US 750 million in fresh capital towards the revival of ZISCO.
Essar Africa Holdings Limited is going to take over the Government
of Zimbabwe's ZISCO related (internal and external) debt obligations
amounting to approximately $US 340 million.
- The Minister
of Industry and Commerce highlighted to the Committee that Essar
Africa Holdings Limited had to finalise negotiations with relevant
government ministries over enablers, such as water, electricity
and a railway line before the conclusion of the Agreement.
- The Committee
was informed that the Government of Zimbabwe was set to benefit
from the Agreement through the resumption of operations at the
steel plant, which would provide raw materials for the local manufacturing
industry. About three thousand jobs of the employees at ZISCO
were to be saved and the benefits would cascade to the families
of the employees. Furthermore, the outstanding ZISCO debt would
be resolved. The Ministry also reported that Essar Africa Holdings
Limited had pledged US$ 5 million towards the Small and Medium
Enterprises Development Fund and another US$ 5 million towards
the Women and Youths Fund.
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