News / Local
Govt to fire 1 200 Zisco workers
27 Nov 2015 at 05:08hrs | Views
GOVERNMENT will terminate contracts for ZISCO employees on three months notice with effect from next month to avoid accumulation of debts from unproductive workers.
Presenting the 2016 Budget yesterday Finance and Economic Development Minister Patrick Chinamasa said that Government will assume the dormant steel maker's debts, as it did with Reserve Bank, to make it attractive to investors.
"The resuscitation of operations at Zisco Steel will have upstream and downstream benefits to the economy, hence the need for Government to secure an investor as soon as possible through private placement," Minister Chinamasa said.
He said central to this will be the need to free the Zisco balance sheet of historical "baggage liabilities", including an accumulation of new obligations from non productive workers.
"Accordingly, all contracts for Zisco employees will be terminated on a three month notice with effect from December 1, 2015," he said.
This follows the collapse of negotiations with Indian firm, Essar Africa, to revive the firm.
The minister said some of the workers are actually not productive and over 1 200 workers will have their contracts terminated.
At the peak of its production, Zisco, whose operations were mothballed in 2008 due to financial constraints, used to produce one million tonnes of steel and employed over 4 000.
The firm was a major economic force in the Redcliff and Kwekwe.
Realising the company's strategic importance to successful turnaround of the economy, Government had engaged Essar, which had committed to invest a record $750 million.
But the deal kept running into blind corners including sticking issues over iron ore reserves to be given to the Indian firm, guarantees for access to power, water and railway system and its huge stock of domestic and foreign debts.
Industry and Commerce Minister Mike Bimha earlier this year attributed the delays in restarting operations "to the complicated nature of the deal and the Government's insistence that the investor should takeover the debts of Zisco."
The firm's debts are estimated at around $370 million.
Government had agreed to sell 54 percent of its shareholding in Zisco and 80 percent of its stake in BIMCO, which holds the iron ore mineral rights, to Essar Africa.
The deal was signed in 2010, but up to date little had happened in terms of Government's objective to revive the firm.
The collapse of the deal with Essar Africa, becomes the second major deal involving Zisco that has failed to materialise after another one with Global Steel Holdings, also from India, failed under unclear circumstances in 2004.
Presenting the 2016 Budget yesterday Finance and Economic Development Minister Patrick Chinamasa said that Government will assume the dormant steel maker's debts, as it did with Reserve Bank, to make it attractive to investors.
"The resuscitation of operations at Zisco Steel will have upstream and downstream benefits to the economy, hence the need for Government to secure an investor as soon as possible through private placement," Minister Chinamasa said.
He said central to this will be the need to free the Zisco balance sheet of historical "baggage liabilities", including an accumulation of new obligations from non productive workers.
"Accordingly, all contracts for Zisco employees will be terminated on a three month notice with effect from December 1, 2015," he said.
This follows the collapse of negotiations with Indian firm, Essar Africa, to revive the firm.
The minister said some of the workers are actually not productive and over 1 200 workers will have their contracts terminated.
At the peak of its production, Zisco, whose operations were mothballed in 2008 due to financial constraints, used to produce one million tonnes of steel and employed over 4 000.
The firm was a major economic force in the Redcliff and Kwekwe.
Realising the company's strategic importance to successful turnaround of the economy, Government had engaged Essar, which had committed to invest a record $750 million.
But the deal kept running into blind corners including sticking issues over iron ore reserves to be given to the Indian firm, guarantees for access to power, water and railway system and its huge stock of domestic and foreign debts.
Industry and Commerce Minister Mike Bimha earlier this year attributed the delays in restarting operations "to the complicated nature of the deal and the Government's insistence that the investor should takeover the debts of Zisco."
The firm's debts are estimated at around $370 million.
Government had agreed to sell 54 percent of its shareholding in Zisco and 80 percent of its stake in BIMCO, which holds the iron ore mineral rights, to Essar Africa.
The deal was signed in 2010, but up to date little had happened in terms of Government's objective to revive the firm.
The collapse of the deal with Essar Africa, becomes the second major deal involving Zisco that has failed to materialise after another one with Global Steel Holdings, also from India, failed under unclear circumstances in 2004.
Source - the herald
