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Essar ahead in Zimbabwe buy

business Updated: Nov 09, 2010 20:48 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The Ruia-controlled $15 billion (R67,500 crore) Essar Group has emerged as the preferred bidder for a majority stake in Zimbabwe's state-run steel-maker ZISCO. The firm has a capacity to produce one million tonne steel per year.

Essar Africa Holdings Ltd, a privately held company of Essar Group, confirmed it has received official notification from the Zimbabwean government regarding its selection as the preferred bidder, and has been invited to finalise terms and conditions.

Zimbabwe had in July invited takeover bids for ZISCO, with a deadline of September 24. This was barely a month after it rejected bids by the world’s largest steelmaker, ArcelorMittal, and India’s Jindal Steel and Power Ltd. The two had been shortlisted in the previous bidding process.

Essar is now the front runner, ahead of JSPL, Sino Zimbabwe Ltd and Sovereign Capitalia, a consortium of local South African investors.

“As part of its proposal, Essar will invest in the revival and expansion of ZISCO and enhance its productivity by leveraging Essar’s expertise in the steel sector, ZISCO’s existing infrastructure and the availability of key raw material including coal and iron ore,” the company said.

Essar Group’s current operations in Africa include oil and gas assets in Nigeria, Kenya and Madagascar, telecom assets in east Africa, BPO operations in South Africa and coal concessions in Mozambique. Since 2005, Indian corporates have spent an estimated $16 billion (R72,000 crore) in the African continent.

ZISCO’s operations are in Redcliff with distribution centres in Bulawayo, Kwekwe and Harare. The firm had been on the block since 2009, when the Zimbambwe government decided to bring in foreign investment to the tune of $10 billion (R45,000 crore) through disinvestment. Zisco is the first state-owned firm to be put up for sale.