The Sunday News
Gabriel Masvora
IT is no secret that Ziscosteel was once one of the biggest and most important companies in the country.
It was more like a big trough where hundreds of companies were feeding from and where thousands of people were also employed and maybe even millions were benefiting indirectly.
It was such an important company that many companies relied on Ziscosteel for their survival and once the steel giant was in trouble many others simply folded.
Last week during the Chronicle Business breakfast meeting in Bulawayo it was revealed that more than 60 percent of the National Railways of Zimbabwe traffic was between Bulawayo and Kwekwe.
The NRZ was literally running on Ziscosteel — transporting raw materials and finished products among other needs to and from the giant steel maker.
NRZ used to rail thousands of tonnes of coal from Hwange to Ziscosteel almost everyday. There were other minerals such as iron ore, and manganese that were also being railed by NRZ destined for Ziscosteel.
NRZ was also at hand distributing various products that were produced at the steel company to other companies in areas in and out of the country.
So it means more than half of NRZ business just went under when Ziscosteel went into a coma.
It also means even coal mining companies had to scale down production since one of the major customers was now struggling.
Most companies in Midlands were also being supported by Ziscosteel.
Kwekwe-based chemical producer Zimchem Refineries reported that it was facing collapse after it lost 75 percent of its business due to the fall of Ziscosteel.
The company, which is involved in tar manufacturing, was relying on coal tar which was a by-product of steel production from Ziscosteel.
It reported that they were just being kept above water by imports which were unsustainable due to high costs involved.
The list of companies that have fallen by the wayside because of inactivity at Ziscosteel is big and if we are to list them it can bring tears to many people’s eyes.
It just goes to show how important and central this Kwekwe company was to the economic matrix of the country.
That is why its revival is seen as a key which can unlock the whole manufacturing sector.
Ziscosteel, like many other companies, has been saddled by many challenges chief among them a huge debt.
This has been the major problem for many companies resulting in huge challenges in trying to get investors to come in and inject capital.
Most investors were simply being turned away by the huge debts in spite of the potential of some of these companies.
That is why many companies especially parastatals are struggling to get partners who can breathe life into their operations.
However, Government in 2010 was fortunate enough to attract an investor for troubled Ziscosteel when it sold its 54 percent to Essar Africa Holdings Ltd, an arm of India’s Essar Group.
This was seen as a dawn of a new era. Essar Africa agreed that it would, among other things, re-line the blast furnaces and coke oven batteries and also inherit the debt of the company.
Then Minister of Industry and Trade Welshman Ncube said when the deal was signed: “In broad terms, the agreement provides Essar to take over and release the Zimbabwean Government from its debt obligations.”
The second phase of the deal was supposed to see Essar rehabilitating the rail link between Redcliff and Hwange Colliery to allow easy railing of coal from Hwange.
The indications were that since the deal had been signed the nation was going to see progress at the giant company.
There was hope in the first few months, with workers getting some salaries but it later turned out that there were some problems with some clauses in the deal resulting in delays in finalising the takeover.
Four years down the line, nothing is happening at Ziscosteel with promise after promise of progress. Last year, it was said by December the company would be running.
In fact, Industry and Commerce Minister Mike Bimha was cornered at one meeting in Bulawayo last year to reveal exactly when production would begin at Ziscosteel.
He emphatically said December (2013). In January he said April and last week he said he would meet officials from Essar to conclude the deal although he was now careful not to commit to dates when the nation would see production starting at the company.
Participants at the breakfast meeting raised a serious aspect on some of the deals the Government has initiated. It is the issue of time taken to implement them.
Four years down the line the Ziscosteel deal is yet to be implemented and as such a lot has changed. When the deal was signed the Ziscosteel debt was around $72 million but it has now shot to more than $220 million.
There are a lot of other things that have changed. I am sure if the investors had set aside some money in their 2011 or even 2012 budget for the project, then the money has failed to be used for such.
Similarly, provided the money is still there it was the same situation in 2013 and maybe this year because it’s only less than four months before the end of 2014.
Government defended its position saying even if some deals were signed there are processes that have to be followed through but seriously if the processes are taking as long as four years, then something is wrong.
We cannot go out and solicit for investments which will take more than four years to implement. If that is the case, it means some of the projects raised in the new economic blueprint —Zim Asset — which is a five-year plan, will only be implemented well after.
It is not a good sign for future deals. It is time to implement the Ziscosteel deal. We have to move on. We have wasted four years in boardrooms and meetings while the company is at a standstill.
Similarly even those companies that were positioning themselves for revival are also on standby.
I am sure some had even set aside money and time in planning how they were going to benefit from the Ziscosteel revival. You will forgive them if they come out and say they have already used the money on something else.
Let us close this Ziscosteel deal once and for all so we can move forward with our quest to revive the economy.
Feedback
Morning. I do not know you but I have been motivated by some of your articles. I agree that I am one of the people who is financially illiterate and do need education on this. I am a kombi operator doing sole trade business and I am also not good at spoken English. I hope I will improve with time if I get assistance. Thank you for a lovely column. — 0779924624.
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