Indian firm to inject fund into rehabilitation of Zimbabwean plant

India's steel company Global Steel Holdings Limited (GSHL) will inject over 400 million U.S. dollars into the Zimbabwe Iron and Steel Company (Ziscosteel) under a management contract signed between the two companies this week, local media The Herald reported on Friday.

GSHL, which boasts of a capital base of 8 billion U.S. dollars will receive a concession to operate the refurbished assets and manage the entire operations of Ziscosteel for a 20-year concession period, after which the management control will revert to the Zimbabwean government, the majority shareholder.

"An attraction to this transaction was the integrated nature of the intervention for the peripheral infrastructure establishments, " Reserve Bank Governor Gideon Gono said on Thursday.

"Part of the funding being injected would address supply side bottlenecks to unlock resource availability," he said.

The development will see Ziscosteel, which has over the years struggled to meet local demand, refurbishing its plant and equipment including the mini-power station in Redcliff.

According to the Indian steel producer, Ziscosteel is projected to earn the country over 500 million U.S. dollars once the refurbishment program is completed as well as generating employment.

Ziscosteel's plants earmarked for rehabilitation include blast furnaces, coke oven batteries 3, LD furnaces and rolling mills.

To achieve optimum production, Ziscosteel requires all its coke oven batteries to be operating at full throttle.

The funds would also be channeled towards upgrading of infrastructure such as rail network, boosting coal mining capacity and power generation stability.

The contract, which will not have an impact on Ziscosteel's shareholding structure, is a culmination of a thorough due diligence study by the Reserve Bank's corporate finance arm, the Parastatals Reorientation Program.

Zimbabwe has been using billions of dollars to import steel products despite it having one of the most well equipped steel making companies in the region.

In pursuance of this thrust, Ziscosteel aims to explore the manufacturing of other steel products such as steel coils and stainless steel, which is in great demand in Asia.

The Indian-based firm is one of the largest producers of iron and steel products in the world. It also has operations in Bosnia, Mexico, Trinidad, Bulgaria, Libya, Nigeria and the Philippines.

Source: Xinhua