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Delays in Finalizing Zimbabwe-Essar Deal Worry Creditors: Industry Minister

  • Gibbs Dube

Zimbabwe's Industry Minister Welshman Ncube says the delay in finalizing the ZISCO and Essar Africa Holdings deal is worrying the Zimbabwe Iron and Steel Company's Germany and Chinese creditors who should have started receiving their payments had the deal been implemented as agreed.

Ncube told the parliamentary industry committee Monday that under the deal, Essar is supposed to settle Ziscosteel’s $400 million debt to KFW Bank of Germany and Sinosure of China but has not done so after government failed to meet its part of the bargain.

"The problem that we have encountered is that the Chinese do not want to directly deal with Essar in recovering their money," he said.

Government last year sold its 54 percent stake to Essar in a $750 million deal but it stalled as others in the coalition government complained negotiators had grossly undervalued resources involved.

Independent economist Eric Bloch said creditors have the right to file for the liquidation of New Zimbabwe Steel Limited which agreed to takeover Ziscosteel debts.

Cabinet resolved recently to press ahead with the deal, which was almost collapsing, by transferring mining claims to the Indian steel giant to save New Zimbabwe Steel Limited, the company formed through the ZISCO-Essar deal, from crumbling.

The government is expected to hand over to Essar the vast iron ore reserves held by Buchwa Iron Mining Company now known as New Zimbabwe Minerals anytime soon.

Minister Ncube said the Indian company will receive its share certificate after transferring the iron ore.