Chinese firm R&F will invest $1 billion in Zimbabwe Iron and Steel Company (Ziscosteel), Industry and Commerce Minister Mike Bimha said yesterday, the latest attempt to revive the moribund steelmaker, once the largest integrated steel works in the region which shut in 2008.
Bimha said steel output is expected to start within 18 months once negotiations have been completed.
“We are looking at an initial injection of over $1 billion and it will probably come to $2 billion when we proceed but it’s not a small project, it’s a huge project and a lot of work to be done…,” Bimha told journalists at State House where the R&F founder Zhang Li — whose net worth is $3.3 billion — met President Mugabe.
Ziscosteel was once Africa’s biggest integrated steel maker but folded operations in 2008 due to what analysts say was gross mismanagement and a failure by the state-owned firm to upgrade its equipment.
Essar, the African unit of India’s Essar Group in November, 2011 agreed to buy 54 percent in the steel maker in a deal worth $750 million.
But the deal collapsed in 2015 due to squabbles between the partners over ownership of mineral claims.
Bimha said nothing of the debt overhang on the steelmaker which haunted the Essar deal.
Ziscosteel’s foreign and local debt stood at $450 million as at March 31, 2014.
Its revival would also provide a boon for another state-owned company, National Railways of Zimbabwe, as 60 percent of its business came from transporting coal to Ziscosteel.
The steelmaker’s latest angel investor is one of China’s richest businessmen, Zhang Li, who heads the Guangzhou-based R&F Properties.
R&F has been in the news recently — last week the company said it had teamed up with another Chinese firm — CC Land — to buy Nine Elms Square in London in a deal worth £470 million.
It also recently bought 77 hotels from Wanda — another Chinese firm — as part of a $9 billion deal.
R&F is listed on Stock Exchange of Hong Kong and is often referred to as one of the “Five South China Tigers.”
It has an estimated market value of $6.7 billion.
If R&F’s deal goes through, it would be the largest single foreign investment into Zimbabwe’s troubled economy.
Details of the deal were not made public but the scale of investment suggests R&F would have control’s Ziscosteel’s stock, making it the first state-owned company to be privatised. –The Source