Business / Local
Zimbabwe-ESSAR deal rolls into life
12 Aug 2011 at 02:38hrs | Views
ESSAR an Indian investment giant signed a deal with Zimbabwe to rescicitate Zimbabwe Iron and Steel Company (ZISCO).
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Projects and Minerals. In the steel business, Essar is a leading global producer on track to operating 14 million tonnes per annum (MTPA) steel capacity. The Group currently employs 75,000 people across its operations in more than 25 countries in five continents. EAHL, part of the Essar Group, is a private company incorporated in Mauritius.
Two entities emanated out of this deal. The first company is called NewZim Steel (NZS) which will be owned 40% by GoZ and 60% by EAHL. This company will acquire the existing assets of ZISCO and will revive and expand ZISCO's steelmaking capacity in two phases. Firstly, the refurbishment of the plant at an investment value of USD 115 million to be completed in 12-18 months. This will deliver a production capacity of 0.5 MTPA. Secondly, to increase production capacity to 1.2 MTPA, including investment in a Greenfield multi-fuel cogeneration power plant of 50 MW, and an oxygen plant at an incremental investment value of USD 275 million. This is scheduled to be completed within three years.
In the long term, NZS has a vision to increase the capacity of the plant up to 2.5 MTPA.
Throughout the project's lifespan, NZS will continuously evaluate market opportunities to introduce a wider range of products. In addition, every effort will be made during the developmental phases to support and encourage indigenous entrepreneurs and increase the range of steel products manufactured in Zimbabwe.
To ensure sustainable operations of NZS, EAHL will invest in the energy sector through investment in Munyati Thermal Power Station as well as investment in the country's water resources infrastructure and upgrading of railways infrastructure. The proposed investment in the water sector will be in the areas of new pump stations, water supply pipelines and the possible construction of a new dam.
This will not only benefit the operations of NZS and NZM, but also serve the communities and businesses in Redcliff and Chivhu areas. The proposed investment in rail infrastructure will increase the capacity and reliability of the rail line between Hwange and Mutare, and will benefit the economy and in particular the mining and agricultural sectors.
The Major revival activities would be to increase coke production by commissioning Coke Owen battery 4, reviving second steel melting plant, Commission Oxygen plant, and Commission Waste Gas based Power Plant- 50 MW.
The second company, NewZim Minerals (NZM) will be owned 20% by the GoZ and 80% by EAHL. NZM will acquire 100% stake in BIMCO from ZISCO and will be tasked with the exploration and development of ZISCO's mining assets including the Ripple Creek Iron Ore Mine in Redcliff, its limestone deposits and the Mwenezi Iron Ore Deposit. The priority of NZM will be to ensure sufficient supply of good quality iron ore to NZS for the life of its operations including the increased volumes required by any planned capacity expansions.
The revival plan for Ripple Creek Iron & Limestone mine is to ensure Computerisation of entire geological reserves and mine plan, assessment of additional exploration planning, phased capital investment in state of the art mining equipment, identification of vendor for critical spare and work shop facilities in Zimbabwe
And the development plan for Mwenezi deposit requires extensive exploration and testing to establish the reserve and its beneficiation potential. If found feasible, to develop the deposit into a world class mining project with iron ore concentrate (Fe + 65%) using state of art beneficiation technology requiring significant investment. To develop the hematite iron ore (DSO) into a 2 million tonnes per year (Mt/yr) mine, where the fine ore (- 10 mm) will be sent to ZISCO sinter plant and part of lump ore (- 30 + 10 mm) will be transported to ZISCO Blast furnace
The iron ore at Ripple Creek will be mined to feed NZS' steel plant requirements in the short term. The Mwenezi deposit has been relatively unexplored to date and initial work indicates that it largely comprises of jasphalite ore, which is of average to poor grade, indispersed with hematite ore. EAHL will fund NZM for a full testing programme to establish the quantity and quality of the ore, including its beneficial properties and the latest technologies, which can be used for such beneficiation.
It is estimated that this exploration, technology assessment and testing programme will entail an investment of approximately US$ 100 million in the first 18 months. Thereafter, depending on the outcome of the techno-economic feasibility report for the project, EAHL will provide the funding required for the construction of a large-scale beneficiation project and related infrastructure which is estimated to be in the region of USD 3.5 billion. The 20% equity stake of GoZ in NZM will be financed by EAHL and will represent an investment in a world-class asset that will benefit the people and the economy of the Republic of Zimbabwe.
The beneficiation process will convert raw ore into a product that can be marketed internationally. The value of the beneficiated ore will increase by 500% resulting in a higher value product from Zimbabwe. Should the beneficiation process prove to be technically and economically feasible it will also require EAHL to invest in a Greenfield 1,000MW thermal power plant to support the needs of NZM.
The generating capacity of such a power project is higher than the current capacity generated by the country's largest thermal power station, Hwange Power Station. Beneficiated iron ore in excess of domestic requirements would be commercialised through accessing the export markets. The most logical route for the exports of beneficiated ore from Zimbabwe is Mozambique. NZM will undertake detailed feasibility studies to decide between either rail logistics or a slurry pipeline for the most cost effective export logistics solution. Irrespective of which logistics solution is chosen, Zimbabwe will benefit from a significant investment in infrastructural development.
"This project coming to fruition is evidence of how serious we are, as a unity Government, about restoring the past glory of Zimbabwe's steel industry. While this deal is a signal that serious players are investing in Zimbabwe, it can also be a catalyst for attracting further FDI (Foreign Direct Investment). Key for us is that it seeks to achieve many objectives of the Medium Term Plan, among other things infrastructure development, employment creation and resource utilisation." said Prof. Welshman Ncube, Minister of Industry and Commerce.
"We are pleased with the selection of Essar as a partner because of its commitment to the project and its track record in establishing Greenfield and Brownfield steel facilities, its experience in infrastructure development and the successful undertaking of large capital intensive projects," concluded Prof. Ncube.
Mr Ravi Ruia, Vice Chairman, Essar Group, said, "This is a win-win transaction for both GoZ and Essar. We view this union as a long-term partnership with Zimbabwe and its people. We are committed to reviving Zimbabwe's steel industry, adding value to both its natural and human resources and also improving the infrastructure of the country so as to make a significant contribution to the national economy. I am sure the success of this venture will attract further foreign direct investment in other sectors of the economy too."
Essar is notable for being a responsible corporate citizen across the countries and communities in which it operates, and supports a wide variety of Corporate Social Responsibility (CSR) initiatives, which help address community, needs.
The ESSAR Group will endeavour to continue this trend in Zimbabwe to make a meaningful positive impact on the economic and social well-being of the people of Zimbabwe.
Mr. Ruia asserted that, "We have already committed to two funds of US$5 million each towards, firstly entrepreneurship and youth development, and secondly women empowerment and are working closely with the Government to implement the initiatives in the best interest of the people of Zimbabwe".
As part of its Corporate Social Responsibility, ESSAR pledged to work in partnership with government Ministries, institutions and/or organizations in Zimbabwe for leveraging knowledge and resources. They focus to operate in partnership with local university or institutions for ensuring sustainability.
And at regional level, ESSAR wishes to work in partnership with leading national organizations or institutions as well as non-governmental organisations (NGOs), that is, Community based and community managed implementation for greater ownership.
They are also focusing on entrepreneurship development and training of indigenous entrepreneurs, and to develop and support new businesses, plus skills technology transfer to budding entrepreneurs and their businesses.
ESSAE also pledged to enhance educational and health infrastructure, facilities, training and access to skills.
The objectives of the NEWZIM Implementation Model are to support the national effort on indigenisation and economic empowerment of Zimbabweans, as well as to support industrialization, particularly in the rural areas.
They are obliged to leverage existing agricultural resources, and to provide income opportunities to women and skill development for the youth, particularly with self employment objectives.
ESSAR wishes to support the adjoining communities in Redcliff and Chivhu in the areas of: Health to facilitate access to primary health care, improving the quality of education and promoting the developing sporting activities
The ESSAR Group continues to expand its global footprint, focusing on markets in Asia, Africa, Europe, the Americas and Australia. Essar invests significantly in the latest technology to drive forward and backward integration in its businesses, and on leveraging synergies between these businesses.
It also focuses on, in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings.
Zimbabwe is facing a fertile opportunity from its "Look East Policy" to tap from ESSAR its rich investment prospects in the country. This will go a long way to improve and facilitate a boom of the local economy, which is recovering at a faster rate after a decade-long decline caused by illegal sanctions imposed on the country by USA, Britain and their Western allies.
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Projects and Minerals. In the steel business, Essar is a leading global producer on track to operating 14 million tonnes per annum (MTPA) steel capacity. The Group currently employs 75,000 people across its operations in more than 25 countries in five continents. EAHL, part of the Essar Group, is a private company incorporated in Mauritius.
Two entities emanated out of this deal. The first company is called NewZim Steel (NZS) which will be owned 40% by GoZ and 60% by EAHL. This company will acquire the existing assets of ZISCO and will revive and expand ZISCO's steelmaking capacity in two phases. Firstly, the refurbishment of the plant at an investment value of USD 115 million to be completed in 12-18 months. This will deliver a production capacity of 0.5 MTPA. Secondly, to increase production capacity to 1.2 MTPA, including investment in a Greenfield multi-fuel cogeneration power plant of 50 MW, and an oxygen plant at an incremental investment value of USD 275 million. This is scheduled to be completed within three years.
In the long term, NZS has a vision to increase the capacity of the plant up to 2.5 MTPA.
Throughout the project's lifespan, NZS will continuously evaluate market opportunities to introduce a wider range of products. In addition, every effort will be made during the developmental phases to support and encourage indigenous entrepreneurs and increase the range of steel products manufactured in Zimbabwe.
To ensure sustainable operations of NZS, EAHL will invest in the energy sector through investment in Munyati Thermal Power Station as well as investment in the country's water resources infrastructure and upgrading of railways infrastructure. The proposed investment in the water sector will be in the areas of new pump stations, water supply pipelines and the possible construction of a new dam.
This will not only benefit the operations of NZS and NZM, but also serve the communities and businesses in Redcliff and Chivhu areas. The proposed investment in rail infrastructure will increase the capacity and reliability of the rail line between Hwange and Mutare, and will benefit the economy and in particular the mining and agricultural sectors.
The Major revival activities would be to increase coke production by commissioning Coke Owen battery 4, reviving second steel melting plant, Commission Oxygen plant, and Commission Waste Gas based Power Plant- 50 MW.
The second company, NewZim Minerals (NZM) will be owned 20% by the GoZ and 80% by EAHL. NZM will acquire 100% stake in BIMCO from ZISCO and will be tasked with the exploration and development of ZISCO's mining assets including the Ripple Creek Iron Ore Mine in Redcliff, its limestone deposits and the Mwenezi Iron Ore Deposit. The priority of NZM will be to ensure sufficient supply of good quality iron ore to NZS for the life of its operations including the increased volumes required by any planned capacity expansions.
The revival plan for Ripple Creek Iron & Limestone mine is to ensure Computerisation of entire geological reserves and mine plan, assessment of additional exploration planning, phased capital investment in state of the art mining equipment, identification of vendor for critical spare and work shop facilities in Zimbabwe
And the development plan for Mwenezi deposit requires extensive exploration and testing to establish the reserve and its beneficiation potential. If found feasible, to develop the deposit into a world class mining project with iron ore concentrate (Fe + 65%) using state of art beneficiation technology requiring significant investment. To develop the hematite iron ore (DSO) into a 2 million tonnes per year (Mt/yr) mine, where the fine ore (- 10 mm) will be sent to ZISCO sinter plant and part of lump ore (- 30 + 10 mm) will be transported to ZISCO Blast furnace
The iron ore at Ripple Creek will be mined to feed NZS' steel plant requirements in the short term. The Mwenezi deposit has been relatively unexplored to date and initial work indicates that it largely comprises of jasphalite ore, which is of average to poor grade, indispersed with hematite ore. EAHL will fund NZM for a full testing programme to establish the quantity and quality of the ore, including its beneficial properties and the latest technologies, which can be used for such beneficiation.
It is estimated that this exploration, technology assessment and testing programme will entail an investment of approximately US$ 100 million in the first 18 months. Thereafter, depending on the outcome of the techno-economic feasibility report for the project, EAHL will provide the funding required for the construction of a large-scale beneficiation project and related infrastructure which is estimated to be in the region of USD 3.5 billion. The 20% equity stake of GoZ in NZM will be financed by EAHL and will represent an investment in a world-class asset that will benefit the people and the economy of the Republic of Zimbabwe.
The beneficiation process will convert raw ore into a product that can be marketed internationally. The value of the beneficiated ore will increase by 500% resulting in a higher value product from Zimbabwe. Should the beneficiation process prove to be technically and economically feasible it will also require EAHL to invest in a Greenfield 1,000MW thermal power plant to support the needs of NZM.
The generating capacity of such a power project is higher than the current capacity generated by the country's largest thermal power station, Hwange Power Station. Beneficiated iron ore in excess of domestic requirements would be commercialised through accessing the export markets. The most logical route for the exports of beneficiated ore from Zimbabwe is Mozambique. NZM will undertake detailed feasibility studies to decide between either rail logistics or a slurry pipeline for the most cost effective export logistics solution. Irrespective of which logistics solution is chosen, Zimbabwe will benefit from a significant investment in infrastructural development.
"We are pleased with the selection of Essar as a partner because of its commitment to the project and its track record in establishing Greenfield and Brownfield steel facilities, its experience in infrastructure development and the successful undertaking of large capital intensive projects," concluded Prof. Ncube.
Mr Ravi Ruia, Vice Chairman, Essar Group, said, "This is a win-win transaction for both GoZ and Essar. We view this union as a long-term partnership with Zimbabwe and its people. We are committed to reviving Zimbabwe's steel industry, adding value to both its natural and human resources and also improving the infrastructure of the country so as to make a significant contribution to the national economy. I am sure the success of this venture will attract further foreign direct investment in other sectors of the economy too."
Essar is notable for being a responsible corporate citizen across the countries and communities in which it operates, and supports a wide variety of Corporate Social Responsibility (CSR) initiatives, which help address community, needs.
The ESSAR Group will endeavour to continue this trend in Zimbabwe to make a meaningful positive impact on the economic and social well-being of the people of Zimbabwe.
Mr. Ruia asserted that, "We have already committed to two funds of US$5 million each towards, firstly entrepreneurship and youth development, and secondly women empowerment and are working closely with the Government to implement the initiatives in the best interest of the people of Zimbabwe".
As part of its Corporate Social Responsibility, ESSAR pledged to work in partnership with government Ministries, institutions and/or organizations in Zimbabwe for leveraging knowledge and resources. They focus to operate in partnership with local university or institutions for ensuring sustainability.
And at regional level, ESSAR wishes to work in partnership with leading national organizations or institutions as well as non-governmental organisations (NGOs), that is, Community based and community managed implementation for greater ownership.
They are also focusing on entrepreneurship development and training of indigenous entrepreneurs, and to develop and support new businesses, plus skills technology transfer to budding entrepreneurs and their businesses.
ESSAE also pledged to enhance educational and health infrastructure, facilities, training and access to skills.
The objectives of the NEWZIM Implementation Model are to support the national effort on indigenisation and economic empowerment of Zimbabweans, as well as to support industrialization, particularly in the rural areas.
They are obliged to leverage existing agricultural resources, and to provide income opportunities to women and skill development for the youth, particularly with self employment objectives.
ESSAR wishes to support the adjoining communities in Redcliff and Chivhu in the areas of: Health to facilitate access to primary health care, improving the quality of education and promoting the developing sporting activities
The ESSAR Group continues to expand its global footprint, focusing on markets in Asia, Africa, Europe, the Americas and Australia. Essar invests significantly in the latest technology to drive forward and backward integration in its businesses, and on leveraging synergies between these businesses.
It also focuses on, in-house research and innovation to be a low-cost manufacturer with high quality products and innovative customer offerings.
Zimbabwe is facing a fertile opportunity from its "Look East Policy" to tap from ESSAR its rich investment prospects in the country. This will go a long way to improve and facilitate a boom of the local economy, which is recovering at a faster rate after a decade-long decline caused by illegal sanctions imposed on the country by USA, Britain and their Western allies.
Source - Global Networks Media
