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Zisco deal in limbo

A US$400 million investment by India’s Global Steel Holdings to rehabilitate Zimbabwe’s state-owned iron and steel works hangs in the balance barely six months after its signing, an official said on Wednesday.

Global Steel in March agreed to rehabilitate the ai

ling government-owned Zimbabwe Iron and Steel Company (Ziscosteel), a key foreign currency earner before independence in 1980, which would have seen output rising more than 17 times.

But on Wednesday, Enoch Porusingazi, who chairs a parliamentary committee on foreign affairs and international trade, said a recent visit and investigations at the company showed the deal could be heading for collapse.

Parliamentary committees in Zimbabwe scrutinise the operations of ministries and companies that fall under them and can recommend a course of action to the government.

In April, Global Steel seconded an official to run Ziscosteel but local media said the official had left after contractual disagreements.

“We found no officials from Global or their representatives and from our investigations I cannot say the deal is still on,” Porusingazi told Reuters.

“But investigations are ongoing and until we clarify from all stakeholders what I can safely say is it’s not clear whether the deal is on or not,” he added.

Global Steel Officials were not available for comment.

The March agreement gave Global Steel a 20-year management contract for the plant, which would remain government-owned. The deal had marked one of the biggest foreign investments seen in recent years in Zimbabwe, which is battling a 7-year recession.

Officials have said the deal was particularly important for President Robert Mugabe’s “Look East” policy to lure Asian and Muslim investors into a country that has experienced frosty relations with the West over Harare’s policies.

Ziscosteel was the main foreign currency earner before independence from Britain in 1980, but output has sharply fallen to just 78 000 tonnes of steel annually because its main furnace — which accounts for 70 % of production — has been derelict for years.

Porusingazi said Ziscosteel was not producing steel due to shortages of coal to fire furnaces and a lack of funding to recapitalise it and procure spare parts.

“I am a bit shaken by what my committee saw at Ziscosteel. The company is basically not producing, it is on a kind of care and maintenance basis,” he said.

Mugabe’s government has previously identified Ziscosteel among underperforming state entities to be privatised under a plan to revive the country’s ailing economy. — Reuter.

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