Zimbabwe’s Industry Minister Welshman Ncube has described how he had to battle against stiff Chinese competition, backed by President Robert Mugabe and Zanu PF ministers, to win the deal for Indian iron and steel giant Essar to buy Zimbabwe’s derelict Zimbabwe Iron and Steel Company, Zisco.
It was the largest single foreign investment into Zimbabwe since independence 31 years ago.
Ncube was the founding secretary-general of the Movement for Democratic Change (MDC) before it split and is now president of the smaller MDC. He was a very senior lawyer before politics overtook his career at the bar.
He explained in an interview how he had persuaded Mugabe, the final arbiter of such decisions, to accept the Essar offer over a Chinese bid. Two Zanu PF cabinet ministers were backing potential Chinese investors and Mugabe has mostly ensured that China gets preference.
But private company Essar, a giant in India, made its first significant move into southern Africa by buying the state’s junked and abandoned Zisco and much of its underground assets at Redcliff in central Zimbabwe.
Zisco used to produce the cheapest pig iron in the world before independence. But despite considerable investment since then, Zanu-PF ran this national asset into the ground five years ago. The plant is silent.
At the height of hyper inflation in 2008, when the Zimbabwe dollar devalued every few minutes, a clique of Zanu-PF-aligned merchants and South African scrap dealers looted much of the valuable metal lying around Zisco.
The value of its derelict infrastructure was only R280 million when Essar bought it.
Ncube said that Essar, a privately-owned company, bought Zisco’s foreign and domestic debt of about R2.8 billion and would invest about the same again into rebuilding the plant and developing new iron ore sites, the first in Chivu about 150km south of Harare.
Ncube came under enormous scrutiny while setting up the deal. His landlines and cellphones were bugged, as was his Harare home and for months he was impossible to find as be worked on the deal.
“Mugabe preferred the Chinese. That’s his policy. Eventually he met with Essar executives privately and then said OK,” Ncube said. – Peta Thornycroft ( Independent Foreign Service)