Essar Africa Holdings Ltd (EAHL) is set to spend US$436M to refurbish and upgrading the former ZISCO government owned steelworks at Redcliff, Zimbabwe
.The work will take place in two phases. Phase 1 involves the refurbishment of the plant at an investment of $115M to be completed in 12 - 18 months. This will deliver a production capacity of 500kt/y.
Phase 2 will increase production capacity to 1.2Mt/y, including the installation of a multi-fuel cogeneration 50MW power plant and an oxygen plant at an incremental investment of $275M. This is scheduled to be completed within three years.
Essar is keen to finalise the $750M deal 8 months after it was signed, indicated that full consummation of the partnership with government was stalled by the mines ministry delay to transfer Buchwald Iron Mining Company’s (AIMCO) iron ore claims to the Company.
As part of the investment deal, Essar has also committed to take over $340M of government debt obligations in respect of the external debt owed by ZISCO to foreign entities such as KFW of Germany and Sino Sure of China.
The company would also meet over $22M in outstanding salaries to workers and contributions owed to the National Social Security Authority pension fund. Essar is also said to have expressed an interest in refurbishing some of Whinge Thermal Power station towers, in a strategic partnership.
EAHL is a subsiduary company of Essar Steel of India where it has recently increased capacity to 10Mt/y and also owns Essar Steel Algoma a flat products integrated works in Canada and Essar Steel Minnesota which mines low grade taconite ore in the western part of the Mesabi Range, USA.