ArcelorMittal looks set to further extend its tentacles into Southern Africa after it emerged that the multinational steel corporation had put in a bid for the troubled state-owned Zimbabwe Iron and Steel Company (Ziscosteel).
Zicosteel has suffered a decade-long slump caused by alleged looting and externalisation of funds by officials linked to Zanu-PF.
Foreign investors are lining up to acquire the 70% stake in Ziscosteel offered by the Zimbabwe government.
Three valid bids are under review, said Welshman Ncube, the minister of industry and commerce, namely those of ArcelorMittal South Africa (Amsa), Jindal Steel and Power of India, and Shogun, a Chinese company.
In May President Robert Mugabe rejected an earlier bid by Amsa on grounds that the multinational was too big for the small country. However, an industry source revealed that Amsa now has the full support of top Zimbabwe government officials who believe it could turn Ziscosteel’s fortunes around.
“Of all the bids received, we feel strongly that ArcelorMittal has the capacity to run Ziscosteel. We welcome its new bid, as it realises that conditions have changed from when its bid was rejected,” the source said.
Media reports suggest that Amsa is prepared to channel more than $500-million to the Zimbabwean concern to pay off its estimated debts of $300-million and recapitalisation projects.
Insiders at the ministry of industry and commerce described the debt strategy offered by Jindal Steel and Power as “not feasible”, making Amsa the frontrunner.
At peak operating capacity Ziscosteel produced one million tonnes of steel annually, making it the second-largest steel producer in sub-Saharan Africa after Amsa.
However, steel production ceased two years ago and the company has reportedly been selling scrap metal.
The bulk of Ziscosteel’s debts were accrued in 2006 after what was dubbed the “Ziscogate scandal”, in which high-powered Zanu-PF officials, including Deputy President Joyce Mujuru and Defence Minister Emerson Mnangagwa, were fingered for siphoning off the parastatal’s resources.
A report by the National Economic Conduct Inspectorate detailing the alleged looting was never made public. Observers have reacted cynically to the government’s requirement that bidders include a debt strategy for Ziscosteel, seeing it as an attempt to protect the looters, who have never been prosecuted.
In an interview with the Mail & Guardian this week Ncube said: “It is true that a lot of externalisation and irregularities took place at Ziscosteel, but beyond the stepping down and resignation of several people and restructuring of the board, no one was arrested. It is not for me to open up old cases.”
He said that when a new investor becomes involved “we will restructure the board at Ziscosteel to reflect the new interests”.
Ncube said his ministry had notified the three parties in the unity government of the bids and was waiting for a decision.
It is also understood that the new foreign investor will have special privileges exempting it from Zimbabwe’s controversial empowerment law, which requires foreign companies to cede a controlling stake to indigenous Zimbabweans.