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Zimasco placed under corporate rescue
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Zimasco, one of Zimbabwe's largest ferrochrome producers, has been placed under corporate rescue following court filings by controversial businessman Shepherd Tundiya, who claims the company owes creditors over US$77 million.
Tundiya alleges that his company, Avim, entered into an agreement with Zimasco in 2017 to supply coke peas - used to fire up furnaces - from South Mining in Hwange. However, he claims that Zimasco failed to honor the deal.
"Had Zimasco not breached the agreement, Avim would have delivered 288,000 tonnes of coke peas at US$270 per tonne between August 2, 2017, and August 1, 2023," Tundiya told the court. He further asserts that Avim suffered losses amounting to US$17.3 million from August 2017 to February 2019 and an additional US$50.2 million from March 2019 to August 2023.
A note from the Master of the High Court reveals that Zimasco has accumulated debts totaling US$77 million. Court documents list outstanding liabilities to suppliers, the Zimbabwe Revenue Authority (ZIMRA), the Zimbabwe Electricity Supply Authority (ZESA), and its employees.
Tundiya argued that, rather than liquidation, corporate rescue was necessary due to Zimasco's continued refusal to settle its debts. The High Court agreed and, last Wednesday, appointed Wilson Manase as the corporate rescue practitioner, placing Zimasco under administration and shielding it from immediate legal action by creditors.
Tundiya further suggested that Zimasco, owned by China's Sinosteel, should be handed over to new investors.
"I am aware that there are potential investors targeting chrome mining due to the spike in demand. Investors with equity financing can be brought on board," he stated.
The corporate rescue intervention comes at a time when Zimasco has been eyeing expansion, with plans that include new furnaces and a 100MW solar power plant in Kwekwe. The company commissioned a new furnace in December 2023 and has committed to redeveloping its mining assets along the Great Dyke.
Despite its production capacity of 70,000 tonnes of ferrochrome per year, Zimasco has faced frequent furnace shutdowns in recent years due to volatile ferrochrome prices and high electricity costs.
Meanwhile, Tundiya's legal victory is overshadowed by his controversial past. In 2018, an audit implicated him in using political influence to oust a contractor from Hwange Colliery. Additionally, a parliamentary report alleged that he owed Hwange Colliery US$481,000 for coal deliveries paid in advance.
In 2019, contractor JR Goddard told a court that Tundiya attempted to blackmail him into withdrawing charges against four MPs accused of soliciting a bribe in exchange for a coal mining contract. Although Tundiya was later acquitted, his reputation remains under scrutiny. Further controversy arose in 2020 when a magistrate and court clerk were arrested for allegedly releasing two stolen vehicles to Tundiya.
With Zimasco now under corporate rescue, its future - and that of Zimbabwe's ferrochrome industry - remains uncertain.
Tundiya alleges that his company, Avim, entered into an agreement with Zimasco in 2017 to supply coke peas - used to fire up furnaces - from South Mining in Hwange. However, he claims that Zimasco failed to honor the deal.
"Had Zimasco not breached the agreement, Avim would have delivered 288,000 tonnes of coke peas at US$270 per tonne between August 2, 2017, and August 1, 2023," Tundiya told the court. He further asserts that Avim suffered losses amounting to US$17.3 million from August 2017 to February 2019 and an additional US$50.2 million from March 2019 to August 2023.
A note from the Master of the High Court reveals that Zimasco has accumulated debts totaling US$77 million. Court documents list outstanding liabilities to suppliers, the Zimbabwe Revenue Authority (ZIMRA), the Zimbabwe Electricity Supply Authority (ZESA), and its employees.
Tundiya argued that, rather than liquidation, corporate rescue was necessary due to Zimasco's continued refusal to settle its debts. The High Court agreed and, last Wednesday, appointed Wilson Manase as the corporate rescue practitioner, placing Zimasco under administration and shielding it from immediate legal action by creditors.
Tundiya further suggested that Zimasco, owned by China's Sinosteel, should be handed over to new investors.
"I am aware that there are potential investors targeting chrome mining due to the spike in demand. Investors with equity financing can be brought on board," he stated.
The corporate rescue intervention comes at a time when Zimasco has been eyeing expansion, with plans that include new furnaces and a 100MW solar power plant in Kwekwe. The company commissioned a new furnace in December 2023 and has committed to redeveloping its mining assets along the Great Dyke.
Despite its production capacity of 70,000 tonnes of ferrochrome per year, Zimasco has faced frequent furnace shutdowns in recent years due to volatile ferrochrome prices and high electricity costs.
Meanwhile, Tundiya's legal victory is overshadowed by his controversial past. In 2018, an audit implicated him in using political influence to oust a contractor from Hwange Colliery. Additionally, a parliamentary report alleged that he owed Hwange Colliery US$481,000 for coal deliveries paid in advance.
In 2019, contractor JR Goddard told a court that Tundiya attempted to blackmail him into withdrawing charges against four MPs accused of soliciting a bribe in exchange for a coal mining contract. Although Tundiya was later acquitted, his reputation remains under scrutiny. Further controversy arose in 2020 when a magistrate and court clerk were arrested for allegedly releasing two stolen vehicles to Tundiya.
With Zimasco now under corporate rescue, its future - and that of Zimbabwe's ferrochrome industry - remains uncertain.
Source - newZWire
