Zimbabwe will not surrender 90 percent of Iron Ore reserves to Essar

THE Government will not surrender 90 percent of the iron ore reserves it had parceled out to Essar Africa Holdings as that provision of the agreement was "wrong", Mines and Mining Development Deputy Minister Gift Chimanikire has said.

During negotiations for the takeover of Ziscosteel (now New Zimbabwe Steel) the Ministry of Industry and Commerce parceled out iron ore reserves amounting to 40 billion metric tonnes to Essar.

The reserves, believed to be the largest in the world, are held by Buchwa Iron Mining Company, now New Zimbabwe Minerals.

BIMCO was the mining subsidiary of Ziscosteel.

Deputy minister Chimanikire said the Industry and Commerce Ministry, superintended by Professor Welshman Ncube, erred in handing over the vast iron ore reserves to the Indian conglomerate.

Government, he added would reverse its earlier decision to transfer full mineral rights to Essar.

"The decision made by the Ministry of Industry and Commerce was wrong," he said. "You do not just give 90 percent of your resources to a private company.

"We have said to them (Essar): Do not expect us to hand over these resources. As Government, we cannot just do that."

He said negotiations for the mineral rights transfer were taking long, scuppering plans by Essar to start work at the defunct steel plant.

The two sister ministries were now working together to resolve the sticky matters, he said.

"Obviously, it has repercussions on the operator (Essar). But we are not in a hurry. We need to consult with the Ministry of Industry," said Mr Chimanikire, adding that all minerals belonged to the State.

He said the Government was keenly following Essar's plan to construct an iron ore pipeline stretching from Redcliff to the port of Beira.

"Essar says the plan is still in its infancy, despite the Environmental Management Agency (EMA) already running a feasibility study on the ambitious project," he said.

"We want to know the movement of our iron ore. Why is EMA doing an environmental assessment study on the project - if there is nothing going on?" he asked.

The Indian conglomerate has said it would invest over US$4 billion in fresh capital over the next four years to revitalise the idle steel plant.

Protracted negotiations with the Government over mineral rights, tax concessions as well as water and power guarantees have stalled work at the plant.

In the short-term, Essar will inject US$750 million into Ziscosteel.

Through the investment, touted as the largest that Government has clinched over the past decade, annual steel output is expected to rise to 2,5 million tonnes when the plant resumes opera- tions.

Hamstrung by a US$340 million debt overhang, Ziscosteel, which was once the largest integrated steel works on the continent, suspended operations in 2008.