Mnangagwa’s Ziscosteel ‘Lies’ Laid Bare With Essar Deal Collapse

PUMPED UP and feeling anointed to succeed after the Zanu PF congress, Vice President Emmerson Mnangagwa toured the collapsed Ziscosteel in December 2014 and declared that the company – closed since 2009 – would soon resume operations.

Addressing a campaign rally in his then Chirumhanzu constituency, the Midlands political godfather declared: “Very soon, production will resume at New Zimsteel (Zisco’s new name) and this will go a long way in reviving the economy.”

The suffering 2,500 workers – unpaid pretty much since 2011 when President Robert Mugabe launched a purported US$750 million takeover of the steelmaker by Essar Holdings of India – would have been relieved by Mnangagwa’s announcement.

But Mnangagwa’s “re-open soon” was still to materialise in February this year when he, again, gave another assurance while campaigning in Kwekwe for his wife Auxilia ahead of the Chirumanzu-Zibagwe parliamentary by-election.

Said the vice president: “We want each minister to recommit themselves to the agreement which was made between government and Essar Holdings.

“New Zimsteel is one of the strategic projects aimed at reviving the economy. We want to do this in a space of a week and seal the deal once and for all.”

Come November and Mnangagwa’s declarations notwithstanding, the government was delivering Christmas horror for Zisco workers.

Presenting his 2016 budget proposals Finance minister, Patrick Chinamasa, said all the remaining workers would be fired by December 1; the Essar Holdings takeover was effectively dead in the water.

All workers fired

Chinamasa admitted that workers were owed $100 million in outstanding salaries but said nothing about whether and when they would be paid.

The minister said the workers had to be fired in order to make the company attractive to prospective new investors.

“Central to this is the need to free the Ziscosteel balance sheet, historical baggage liabilities including the accumulation of new obligations with regards to wages that arise on account of workers who are not working and are sitting at home,” he said.

The Zisco woe also hits all tax payers with Chinamasa saying government would take over the company’s debts which are estimated at more than US$700 million.

This adds to the US$1billion Reserve Bank of Zimbabwe debt the government also recently loaded on the taxpayer; debts at other mismanaged government companies such as Air Zimbabwe, NRZ have also or are being equally heaped on the taxpayer.

When President Robert Mugabe and his Zanu PF party assumed power at independence in 1980, Zisco was the largest integrated steelworks in sub-Sharan Africa north of the Limpopo.

The company employed more than 6,000 workers and was the mainstay of towns such as Redcliff, Kwekwe and a key part of the country’s industrial hub in Bulawayo.

Millions invested

Hundreds of millions of dollars (mostly loans from Germany and Chinese banks) were invested into upgrading Zisco’s blast furnaces and key plant over the years.

But management incompetence, corrupt government interference with ministers accused of looting the company destroyed Zisco well before the sanctions Mugabe blames for Zimbabwe’s economic problems were imposed at the turn of the millennium.

The Germany lenders – still unpaid – were recently trrying to seize Zimbabwe diamonds in Belguim as well as Harare government property in South Africa.

However, quite why the celebrated Essar Holdings takeover collapsed remains unclear.

Deputy industry minister Chiratidzo Mabuwa, could not shed any light as recently as October, telling MPs that; “It will take a lot of time for me to explain what exactly happened in the ESSAR case.”

Challenges in the global steel industry might have influenced an Essar re-think; steel firms are closing in countries such as Britain as prices collapse due, in part, to a glut of cheap product from China.

But the deal also fell victim, again, to Zimbabwean politics.

Essar could not move ahead with the takeover due to a disagreement between Zanu PF then mines minister, Obert Mpofu, and his industry counterpart Welshman Ncube of the MDC during the coalition government.

Political wrangling

Mpofu refused to sanction the deal, claiming the country had sold a key asset too cheaply.

Mnangagwa conceded before Parliament in October that lack of cooperation between Mpofu and Ncube frustrated the Indian investor.

“We discovered that there was no cooperation going on,” Mnangagwa said.

“Down the line, ESSAR which had raised some funding for the project could not keep the money for several years sitting without implementation.”

The vice president did not explain why the presidency failed to bring the rowing ministers to order so the deal could be implemented.

In his budget statement this Thursday, treasury chief Chinamasa said the dismissal of the workers and takeover of the company’s debt would, he hoped, make Zisco attractive to new investors.

Any buyer would however, need to build the steelworks anew, as the site has been reduced to an industrial wasteland and Redcliff itself to a ghost town. by Gilbert Nyambabvu. source-newzimbabwe

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