By Staff Reporter
The Ziscosteel board has cancelled the Zimcoke deal as it seeks to have an integrated approach in the revival of Ziscosteel.
Zimcoke was based within Ziscosteel and was supposed to rely on Ziscosteel’s coke oven batteries.
Ziscosteel chairperson Martin Manhuwa told an interministerial Committee last week that the new board was cancelling unfavourable deals.
“We are cancelling some agreements that are not favourable to Zisco and the Zimcoke agreement is one that we have cancelled as it was not favourable,” he said.
Manhuwa said the new board was going for an intergrated revival of the company.
Zimcoke Consultant Eddie Cross confirmed in an interview that the movement has been stalled by national developments which have seen government prioritising the revival of Ziscosteel.
Cross who is a consultant at the Central Bank said if government chose to stall the deal it was still ok as Zimcoke was putting national interests ahead of the company’s interests.
“A Chinese group has approached Government to build a giant steel plant. If they get the OK then they have offered to revive Zisco. If the deal goes through Zimcoke will either participate or have their deal cancelled,” Cross said.
In the meantime, the coke producer intimated, “We are waiting for this decision.”
The former Bulawayo legislator said the first prize is the revival of Zisco Steel. “First prize for Zimbabwe is the bigger project which will transform our economy.
We understand that and will go with the national interest when this is determined,” he said.
Earlier this year Cross said the deal was expected to commence once his firm took legal possession of Ziscosteel assets.
“In return an agreement of sale was signed in July 2017 for an equivalent value of Zisco assets including plant and machinery, land and buildings, railway rolling stock, shares in Zimchem and waste products on site.
“After this we had to negotiate to take over the Bank liability with KFW Bank of Frankfurt Germany,” Cross said then.
He added the process involved retrieving the debt from Paris Club and securing the agreement of the German government.
“This took two years. In May 2019, the government of Zimbabwe approved the debt/asset swap in which we were given approval to proceed. Transfer of the assets was carried in August 2019. The shareholders of ZimCoke then had the subdivision surveyed and application was made to transfer title,” he said.A sticking point in the deal according to Cross is that Ziscosteel owes over Z$10 million in rates and is unable to pay the Capital Gains Tax on the transaction we have had to request that the Redcliff Town Council issue a, “rates clearance,” certificate and for the Ministry of Finance to issue a Capital Gains Tax Exemption Certificate to enable transfer.
The process Cross said requires a valuation of the assets of Ziscosteel, “which was carried out two months ago by the Ministry of Local Government. We are waiting for the valuation to be completed.”
Production Cross said will commence after Zimcoke takes legal possession of the said assets.
“When this happens we will take ownership of the assets involved and close the deal with KFW Bank and the Ministry of Finance in Harare.”In the meantime, Zimcoke has secured funding from Equity Shareholders to the tune of US$155 million, Bank Funding US$100 million and KFW Bank refinancing the debt to US$100 million.”As soon as the KFW agreement is signed (shortly-it was accepted by the Attorney General’s in January 2020) and we have legal possession we will finalise funding and start the process of getting the plant back into production. This process will involve several international firms as well as local contractors and engineers,” he said.Cross further explained that the first stage will create 400 jobs at Zimcoke with 300 jobs at Zimchem and 200 jobs at Hwange. “Production levels will be 500 000 tonnes per annum and about 100 000 tonnes of raw materials to Zimchem. We expect the plant to be back in production in December 2020 and full production by August the following year,” he said.