Zim mining minister blocks R6bn injectionComment on this story
Zanu-PF’s prosperous mines minister, Obert Mpofu, has effectively blocked a R6 billion investment for Zimbabwe – the largest since independence 32 years ago.
Mpofu, a Zanu-PF hardliner in the power-sharing government, has put a rescue package for Zimbabwe’s bankrupt iron and steel industry on the brink of collapse by refusing to hand over iron ore claims to Indian steel giant Essar.
Essar won a majority shareholding in Zimbabwe’s state-owned Iron and Steel Company (Zisco), which stopped operating three years ago.
More than half the price to be paid for 54 percent of Zisco is settling its foreign and local debts run up when the company was managed by the former Zanu-PF administration.
Now Mpofu has chosen to ignore the agreement signed with Essar more than a year ago and is insisting that the iron ore claims which were part of Zisco’s assets are audited before they are handed to the Indians.
Details of Zisco’s iron ore claims are on public record: one claim was exhausted over 60 years of Zisco’s life until it closed in 2009; the second has about five years left; and the third, known as Mwenezi, has never been explored or prospected.
In terms of the deal signed with Essar, it would have exclusive rights to prospect the Mwenezi claim in southern Zimbabwe.
After its size and value are established, a mining agreement would be concluded with Essar over how much iron ore it could extract, export or process locally.
The Zisco deal with Essar was concluded despite Zanu-PF’s preference for two Chinese bidders promoted by senior party loyalists.
Industry minister Welshman Ncube, president of the small Movement for Democratic Change party, managed the Zisco bids and backed the deal with Essar.
He told New Zimbabwe.com: “We are taking 14 months to sign a document which in a normal country should take a week.”
He said all other parts of the deal relating to water, finance and energy – portfolios controlled by MDC ministers loyal to Prime Minister Morgan Tsvangirai – had been swiftly managed.
The mines ministry’s insistence on an audit of the iron ore claims before they were handed to Essar for exploration was “nonsensical”.
The terms of the deal with Essar have been available to the media and the public since President Robert Mugabe signed it.
“The issue here is only about Mwenezi. We don’t know the quantity of ore there. This is just an excuse,” said Ncube.
“All that has been agreed (over the iron ore claims) is a special grant so that exploration can be done at Mwenezi with the Department of Geological Services, so that we work together.”
After the deal was signed Essar paid about R7 million a month to many destitute former Zisco workers, but its officials in Harare said this week it had advised Essar to stop paying them until claims for exclusive prospecting rights for the iron ore were signed off.
Zisco’s plant is next to a small, derelict town, Redcliff, in central Zimbabwe.
When the Sunday Independent visited it late last year it was still guarded by a security team and looked neat but dilapidated.
The plant was silent, the town deserted, people thin and poor, and water and electricity in short supply.
Zisco earned a little revenue during Zimbabwe’s hyper-inflationary period from selling its scrap metal, mostly to SA merchants. Mpofu facilitated some of those deals.
One of the SA buyers, New Reclamation, was a regular buyer of Zisco’s scrap. Chief executive David Kassel told the Sunday Independent last year that the scrap was paid for with hard currency – not worthless Zimbabwe dollars, which could be bought by the trillion for a handful of rand.
Mpofu went on to conclude a deal with New Reclamation for a claim in the controversial alluvial diamond fields in eastern Zimbabwe.
This week Mpofu failed to answer three of his cellphone numbers or reply to questions SMSed to those numbers by the Sunday Independent.
He told other media in Zimbabwe last week that the delay in concluding the Essar deal lay at Ncube’s door.
“I do not know why Minister Mpofu is saying this nor why he is delaying completion,” Ncube said in exasperation on Wednesday.
Gift Chimanikire, a founding member of Tsvangirai’s MDC, is deputy mines minister, but insiders say he has no real power and has also made no contribution to consummation of the Essar deal.
Part of the intelligence gossip doing the rounds in Harare is that the Mwenezi claim is fantastically rich and that Ncube has “sold it off” too cheaply, even though there is no evidence so far for either the quantity or quality of the unexplored claim.
When the deal was signed, a veteran metallurgist in Zimbabwe with vast international experience, and who knew Zisco over several decades, scoffed at Harare speculation about the value of its ore claims.
“The Essar deal seems pretty fair to me and good for Zimbabwe,” he said.