Zisco Deal: Let Re-industrialization Begin
Zimbabwe Sunday Mail
ZIMBABWE’s industrialisation strategy has been given a major boost following last week’s announcement that a wealthy Chinese investor — R and F Company — is planning to plough US$2 billion into the iron and steel behemoth, Zisco.
Zisco is the focal point of an industrial ecosystem. The steel mill has both downstream and upstream value chain implications. Moreover, it is one of the few mining enterprises that achieves beneficiation from raw sediment to completely processed steel. This ties in well to two points within President Mugabe’s 10- Point Plan; namely advancing beneficiation of mineral resource endowment and promoting infrastructure development.
Zisco, which has an illustrious history dating back to 1942 when the colonial regime set up the Rhodesian Iron and Steel Commission (RISCOM) to take over all iron and steel production in the country, is therefore crucial for economic turnaround.
Last week, R and F Company president Mr Zhang Li — a well-heeled property magnate, reportedly owning the bulk of properties in Guangzhou, China — flew into the country to meet President Mugabe and underline his willingness to revive Zisco.
Mr Zhang is estimated by Forbes magazine to have a net worth of US$3,4 billion.
The revival of Zisco dovetails with the country’s re-industrialisation thrust, and the African Union’s Agenda 2063, which aims at the socio-economic transformation of the continent.
Already, the nation is pregnant with expectations that the anticipated revival of Zisco will help turn around the economy, which has been sneezing in slightly over a decade largely due to economic sanctions slapped by the West since the turn of the millennium.
RISCO (now Zisco) was used by the Ian Smith regime to sidestep economic sanctions in 1965 after the Unilateral Declaration of Independence (UDI) following a £14 million injection into the second development programme.
So crucial was RISCO such that a meeting for the third expansion programme held in 1972 to boost the steelmaking capacity from 410 000 tonnes to just over one million tonnes per annum was held in Paris, France, in defiance of the United Nations mandatory sanctions against Rhodesia.
The firm still remains key not only to Zimbabwe, but to many countries in the world.
Market watchers say, with almost similar circumstances of sanctions, Zisco can sway economic activity and thrust the country back on the rails.
Zisco’s economic influence cuts across several sectors of the economy such as mining (coal, iron ore, chrome ore); transportation (National Railways of Zimbabwe); energy (Zesa) and others such as local steel companies, health and education.
Standing on solid ground
There is scepticism among some people across the country over whether or not the new Zisco deal will take off.
The concerns are understandable given the challenges that rocked the US$750 million Essar Africa Holdings Limited deal signed in 2011.
But Industry and Commerce Minister Mike Bimha has assured the nation that before the new deal was thrashed, several Government departments, including the ministries of Mines, Finance and Reserve Bank of Zimbabwe, were consulted and have all pledged to play their roles in ensuring it sails through seamlessly.
“This time around it’s different, the entire Government is supportive of this project . . . the President is fully behind this project. Therefore, I think in terms of commitment, there is 100 percent from Government to make it a success,” said Minister Bimha after engaging the investor in Harare.
Last week, Mines and Mining Development Minister Walter Chidhakwa told The Sunday Mail Business that adequate resource claims — for both chrome ore and iron ore — have been put in place ahead of resumption of operations at Zisco.
“We have adequate claims to support Zisco. We have already met the expectations of the investor. They have told us how much iron ore they need, they have told us how much coking coal they need, and they have told us how much coke they need.
“We are now working on the chrome because they want to go for the stainless product. We met the expectations when the first investor (Essar) came; of course the investor did not comply with the terms of the agreement.
“So with this investor, we are satisfied that from a mining perspective we are ready for the business,” said Minister Chidhakwa.
Government took 50 percent of chrome ore reserves held by the biggest chrome miners, ZimAlloys and Zimasco.
Part of those claims have been allocated to small-scale miners while others would be given to smelting companies.
Government will keep some of the claims and use them to attract investments, such as the Zisco project.
ZimAlloys has about 32 000 hectares of chrome reserves and it ceded half of that to Government while Zimasco ceded 22 700 hectares. Similarly, iron ore reserves have been set aside for the project.
Previously, Zisco got iron ore from the Buchwa Iron Mining Company (Bimco) while others came from Chivhu.
Buchwa Mine closed in 1998.
Said Minister Chidhakwa: “The issue is not whether an ore reserve is functional; the issue is whether we have reserves . . . These reserves are already there and mining ore is not the most sophisticated activity.”
Given its broad linkages with companies that have potential to create thousands of jobs, Zisco will have massive impact on the economy.
In 1965, RISCO employed about 3000 people, with 2 104 of them being locals. At that time, RISCO was producing a range of products such as light rods, window sections, fencing standards and droppers, light and heavy flats and angles, ploughshares and rounds.
After independence, Zisco emerged as one of the country’s biggest employers with over 5000 workers at its peak in the 1990s.
A population of over 100 000 people in Redcliff and Kwekwe, eked a living in one way or the other from Zisco, and its closure has now left a trail of despondency in the towns.
Crucially, several companies such as Hwange Colliery Company Limited, NRZ, the Zimbabwe Power Company (ZPC), chrome and iron ore miners, among others, used to employ thousands of people because of demand for their products and services from Zisco.
Ever since Zisco begun to show signs of distress, most of the companies started retrenching, and good times are now in the horizon for job-seekers.
The proposed revival of Zisco comes at a time when NRZ is gearing for a staggering US$400 million tie-up with Diaspora Infrastructure Development Group (DIDG/Transnet).
The NRZ/ DIDG is expected to transform its operations.
Already, NRZ plans to splash about US$150 million in acquiring 24 mainline locomotives and 13 shunting locomotives in the first year, while 20 locomotives that are part of the current fleet would be refurbished.
NRZ has 160 locomotives and 60 are running, with a mere 20 being reliable.
The US$400 million investment into NRZ will reposition it as the prime mover of bulk raw materials and finished products for Zisco, particularly chrome and iron ore.
NRZ board chairman Mr Larry Mavhima, last week said: “The recapitalisation of the NRZ becomes strategic considering the coming on board of Zisco.”
Hwange Colliery, which has crafted a turnaround plan anchored on resuming underground mining, plans to take advantage of the expected resuscitation of Ziscosteel to boost its production.
Managing director Mr Thomas Makore, said reports of the revival of Zisco is “very welcome news”.
“Zisco was a big off-taker of our coking coal so it gives us a very significant off-take for our coking coal. It (revival of Zisco) will only support the turnaround plans that we are implementing at the moment.
“Right now we are producing thermal and industrial coal and for Zisco we will need to supply coking coal; that is why we are resuscitating our underground operations.
“We will also have to mine coking coal at our dragline operations; that is how we will respond to this demand,” said Mr Makore.
The approval of the Scheme of Arrangement by creditors in which Hwange made arrangements to settle its obligations amounting to US$352 million, is also seen as a milestone that would help Hwange turnaround its operations.
Already, Hwange has taken delivery of its continuous miner that was being repaired in South Africa on August 13.
Small miners gird loins
Small-scale chrome miners, who are currently bitter over the measly payouts they get for raw chrome per tonne, say they welcome plans to revive Zisco.
Confederation of Chrome Miners Association chairman Mr Isaac Chivendera, told The Sunday Mail Business last week that if Zisco came on board, it would open up the market and allow them to get reasonable prices.
“If the market becomes available, that is what we are yearning for, especially if it is going to support the economy for the betterment of peoples’ living standards.
“As small-scale miners we are ready to support the revival of Zisco. At the moment we are being ripped left, right and centre by the Chinese who are giving us low prices.
“We therefore hope that if Zisco is coming on board, and Government says it will buy chrome from small-scale chrome miners, the better for us” said Mr Chivendera.
Currently, some shadowy Chinese buyers are allegedly paying anything between US$40 and US$70, which miners says is below the perceived breakeven price.
Government has directed Applebridge Limited, a company licensed to buy chrome ore from small-scale miners, to buy at no less than US$85.
However, Mr Chivendera believes a price of US$120 per tonne for raw chrome would be appropriate.
Before Zimasco closed in 2008, the chrome sector was dominated by ZimAlloys and Zimasco.
ZIMBABWE’s industrialisation strategy has been given a major boost following last week’s announcement that a wealthy Chinese investor — R and F Company — is planning to plough US$2 billion into the iron and steel behemoth, Zisco.
Zisco is the focal point of an industrial ecosystem. The steel mill has both downstream and upstream value chain implications. Moreover, it is one of the few mining enterprises that achieves beneficiation from raw sediment to completely processed steel. This ties in well to two points within President Mugabe’s 10- Point Plan; namely advancing beneficiation of mineral resource endowment and promoting infrastructure development.
Zisco, which has an illustrious history dating back to 1942 when the colonial regime set up the Rhodesian Iron and Steel Commission (RISCOM) to take over all iron and steel production in the country, is therefore crucial for economic turnaround.
Last week, R and F Company president Mr Zhang Li — a well-heeled property magnate, reportedly owning the bulk of properties in Guangzhou, China — flew into the country to meet President Mugabe and underline his willingness to revive Zisco.
Mr Zhang is estimated by Forbes magazine to have a net worth of US$3,4 billion.
The revival of Zisco dovetails with the country’s re-industrialisation thrust, and the African Union’s Agenda 2063, which aims at the socio-economic transformation of the continent.
Already, the nation is pregnant with expectations that the anticipated revival of Zisco will help turn around the economy, which has been sneezing in slightly over a decade largely due to economic sanctions slapped by the West since the turn of the millennium.
RISCO (now Zisco) was used by the Ian Smith regime to sidestep economic sanctions in 1965 after the Unilateral Declaration of Independence (UDI) following a £14 million injection into the second development programme.
So crucial was RISCO such that a meeting for the third expansion programme held in 1972 to boost the steelmaking capacity from 410 000 tonnes to just over one million tonnes per annum was held in Paris, France, in defiance of the United Nations mandatory sanctions against Rhodesia.
The firm still remains key not only to Zimbabwe, but to many countries in the world.
Market watchers say, with almost similar circumstances of sanctions, Zisco can sway economic activity and thrust the country back on the rails.
Zisco’s economic influence cuts across several sectors of the economy such as mining (coal, iron ore, chrome ore); transportation (National Railways of Zimbabwe); energy (Zesa) and others such as local steel companies, health and education.
Standing on solid ground
There is scepticism among some people across the country over whether or not the new Zisco deal will take off.
The concerns are understandable given the challenges that rocked the US$750 million Essar Africa Holdings Limited deal signed in 2011.
But Industry and Commerce Minister Mike Bimha has assured the nation that before the new deal was thrashed, several Government departments, including the ministries of Mines, Finance and Reserve Bank of Zimbabwe, were consulted and have all pledged to play their roles in ensuring it sails through seamlessly.
“This time around it’s different, the entire Government is supportive of this project . . . the President is fully behind this project. Therefore, I think in terms of commitment, there is 100 percent from Government to make it a success,” said Minister Bimha after engaging the investor in Harare.
Last week, Mines and Mining Development Minister Walter Chidhakwa told The Sunday Mail Business that adequate resource claims — for both chrome ore and iron ore — have been put in place ahead of resumption of operations at Zisco.
“We have adequate claims to support Zisco. We have already met the expectations of the investor. They have told us how much iron ore they need, they have told us how much coking coal they need, and they have told us how much coke they need.
“We are now working on the chrome because they want to go for the stainless product. We met the expectations when the first investor (Essar) came; of course the investor did not comply with the terms of the agreement.
“So with this investor, we are satisfied that from a mining perspective we are ready for the business,” said Minister Chidhakwa.
Government took 50 percent of chrome ore reserves held by the biggest chrome miners, ZimAlloys and Zimasco.
Part of those claims have been allocated to small-scale miners while others would be given to smelting companies.
Government will keep some of the claims and use them to attract investments, such as the Zisco project.
ZimAlloys has about 32 000 hectares of chrome reserves and it ceded half of that to Government while Zimasco ceded 22 700 hectares. Similarly, iron ore reserves have been set aside for the project.
Previously, Zisco got iron ore from the Buchwa Iron Mining Company (Bimco) while others came from Chivhu.
Buchwa Mine closed in 1998.
Said Minister Chidhakwa: “The issue is not whether an ore reserve is functional; the issue is whether we have reserves . . . These reserves are already there and mining ore is not the most sophisticated activity.”
Given its broad linkages with companies that have potential to create thousands of jobs, Zisco will have massive impact on the economy.
In 1965, RISCO employed about 3000 people, with 2 104 of them being locals. At that time, RISCO was producing a range of products such as light rods, window sections, fencing standards and droppers, light and heavy flats and angles, ploughshares and rounds.
After independence, Zisco emerged as one of the country’s biggest employers with over 5000 workers at its peak in the 1990s.
A population of over 100 000 people in Redcliff and Kwekwe, eked a living in one way or the other from Zisco, and its closure has now left a trail of despondency in the towns.
Crucially, several companies such as Hwange Colliery Company Limited, NRZ, the Zimbabwe Power Company (ZPC), chrome and iron ore miners, among others, used to employ thousands of people because of demand for their products and services from Zisco.
Ever since Zisco begun to show signs of distress, most of the companies started retrenching, and good times are now in the horizon for job-seekers.
The proposed revival of Zisco comes at a time when NRZ is gearing for a staggering US$400 million tie-up with Diaspora Infrastructure Development Group (DIDG/Transnet).
The NRZ/ DIDG is expected to transform its operations.
Already, NRZ plans to splash about US$150 million in acquiring 24 mainline locomotives and 13 shunting locomotives in the first year, while 20 locomotives that are part of the current fleet would be refurbished.
NRZ has 160 locomotives and 60 are running, with a mere 20 being reliable.
The US$400 million investment into NRZ will reposition it as the prime mover of bulk raw materials and finished products for Zisco, particularly chrome and iron ore.
NRZ board chairman Mr Larry Mavhima, last week said: “The recapitalisation of the NRZ becomes strategic considering the coming on board of Zisco.”
Hwange Colliery, which has crafted a turnaround plan anchored on resuming underground mining, plans to take advantage of the expected resuscitation of Ziscosteel to boost its production.
Managing director Mr Thomas Makore, said reports of the revival of Zisco is “very welcome news”.
“Zisco was a big off-taker of our coking coal so it gives us a very significant off-take for our coking coal. It (revival of Zisco) will only support the turnaround plans that we are implementing at the moment.
“Right now we are producing thermal and industrial coal and for Zisco we will need to supply coking coal; that is why we are resuscitating our underground operations.
“We will also have to mine coking coal at our dragline operations; that is how we will respond to this demand,” said Mr Makore.
The approval of the Scheme of Arrangement by creditors in which Hwange made arrangements to settle its obligations amounting to US$352 million, is also seen as a milestone that would help Hwange turnaround its operations.
Already, Hwange has taken delivery of its continuous miner that was being repaired in South Africa on August 13.
Small miners gird loins
Small-scale chrome miners, who are currently bitter over the measly payouts they get for raw chrome per tonne, say they welcome plans to revive Zisco.
Confederation of Chrome Miners Association chairman Mr Isaac Chivendera, told The Sunday Mail Business last week that if Zisco came on board, it would open up the market and allow them to get reasonable prices.
“If the market becomes available, that is what we are yearning for, especially if it is going to support the economy for the betterment of peoples’ living standards.
“As small-scale miners we are ready to support the revival of Zisco. At the moment we are being ripped left, right and centre by the Chinese who are giving us low prices.
“We therefore hope that if Zisco is coming on board, and Government says it will buy chrome from small-scale chrome miners, the better for us” said Mr Chivendera.
Currently, some shadowy Chinese buyers are allegedly paying anything between US$40 and US$70, which miners says is below the perceived breakeven price.
Government has directed Applebridge Limited, a company licensed to buy chrome ore from small-scale miners, to buy at no less than US$85.
However, Mr Chivendera believes a price of US$120 per tonne for raw chrome would be appropriate.
Before Zimasco closed in 2008, the chrome sector was dominated by ZimAlloys and Zimasco.
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