The Sunday News
ONE of the country’s oldest cast iron product manufacturers, Bulawayo-based Busmetal is on the brink of closure if it fails to immediately access at least $150 000 needed urgently to keep operations afloat, an official has said. The company’s general manager, Mr Ridley Ndlovu, said the company had struggled to remain viable since the dollarisation of the economy in 2009.
It specialises in the manufacture of short collar joints, mainhole covers (for covering sewage pits by local authorities), three-legged pots, cast iron tees and bends as well as various cast iron products as per customer’s request.
The company is yet to start production after its foundry was flooded following incessant rains last year. However, prior to ceasing operations its capacity utilisation had dropped to below 10 percent.
A foundry is a factory that produces metal castings. Metals are cast into shapes by melting them into a liquid, pouring the metal in a mould, and removing the mould material or casting after the metal has solidified as it cools. The most common metals processed are aluminium and cast iron. However, other metals, such as bronze, brass, steel, magnesium, and zinc, are also used to produce castings in foundries.
“We are at the preparatory stage in terms of resuming production because our foundry was flooded and we have to make sure that the plant is dry so as to guard against damaging it.
“If we are at peak we cast after every two days but we were now faced with a situation whereby we were doing that once a month,” Mr Ndlovu said.
He said the company applied for funding under the Distressed Industries and Marginalised Areas Fund (Dimaf) but it was still to receive its allocation to date.
At least 48 companies have accessed Dimaf and of these 26 are from Bulawayo with the rest being disbursed to firms in other parts of the country.
Dimaf was intiated in 2010 to help companies retool. Government and Old Mutual were supposed to inject $20 million each. To date, Old Mutual has put in $27 million. Old Mutual’s subsidiary, CABS, manages the fund.
However, Government is yet to put its share to the pool of resources meant to assist ailing companies.
“We need about $150 000 for buying raw material, relining our cupolar furnace as well as repairing our jolting machines and other machines at the workshop. We also need to replace our injection moulder which is used for manufacturing plastic containers because it is outdated.
“We applied for a loan under Dimaf last year but we are still to get it. We did all the formalities as requested by CABS. The bank insists that Government is still to meet its obligation with regards to unveiling the funds for the facility and as such it is not in a position to give us anything at the moment,” Mr Ndlovu said.
Busmetal sources its raw materials locally and these include cast iron scrap, limestone, ferro-silicon, ferromagnesian and moulding sand.
The Association for Business in Zimbabwe chief executive officer, Dr Lucky Mlilo, said the Dimaf facility was not enough to assist distressed companies further noting that the terms and conditions for accessing the loan deterred struggling entities.
“To tell the truth the funding under Dimaf was insufficient . . . in all essence there is a need to look at other options of lines of credit because Dimaf was just a drop in the ocean.
“Its terms and conditions also didn’t suit distressed companies because if we are talking of distressed companies we are talking of companies that are drowning and you ask them to produce things like three year audited results and issues to do with collateral, all this is not for struggling entities,” Dr Mlilo said.
He said Government should have initiated its own friendly funding as a rescue package for collapsing companies.
