Name and Location
Zimbabwe steel plant.

Project Description
The government of Zimbabwe and Essar Africa Holdings Limited (EAHL) have launched two entities: NewZim Steel (NZS) and NewZim Minerals (NZM).

NZS will be owned 40% by the Zimbabwe government and 60% by EAHL.

NZS will acquire the existing assets of Zimbabwe Iron & Steel Company (Zisco) and will revive and expand Zisco’s steel making capacity in two phases:

Phase 1 will include the refurbishment of the plant to deliver a production capacity of 500 000 t/y.

Phase 2 will involve the increase in production capacity to 1.2-million tons a year, including investment in a greenfield multifuel cogeneration power plant of 50 MW and an oxygen plant.

In the long term, the plan is to increase the capacity of the plant up to 2.5-million tons a year.

To ensure sustainable operations of the NZS, EAHL will invest in the Munyati power station, as well as in the country’s water infrastructure and in the upgrade of rail infrastructure.

The proposed investment in the water sector will be in the areas of new pumpstations, water supply pipelines and the possible construction of a new dam.

The proposed investment in rail infrastructure will increase the capacity and reliability of the rail line between Hwange and Mutare, and will benefit the economy and in particular the mining and agriculture sectors.
NZM will be owned 20% by the government and 80% by EAHL. NZM will acquire a 100% stake in Buchwa Iron Mining Company from Zisco, which will be tasked with the exploration and development of Zisco’s mining assets, including the Ripple Creek iron-ore mine in Redcliff, its limestone deposits and the Mwanesi iron-ore deposit.

The priority of NZM will be to ensure sufficient supply of good-quality iron-ore to NZS for the life of its operations, including the increased volumes required by any planned capacity expansions.

The iron-ore at Ripple Creek will be mined to feed NZS’s steel plant requirements in the short term.

EAHL will fund NZM for a full testing programme to establish the quantity and quality of ore in the Mwanesi deposit, including its beneficiated properties and the latest technologies that can be used for such beneficiation.

The beneficiation process will convert raw ore into a product that can be marketed internationally.

Should the beneficiation process prove to be technically and economically feasible, it will also require EAHL to invest in a greenfield 1 000 MW thermal power plant to support the needs of NZM.

The generating capacity of such a power project is higher than the current capacity generated by the country’s largest thermal power station, Hwange power station.

Beneficiated iron-ore exceeding domestic requirements will be exported.
The most logical route for the exports of beneficiated ore from Zimbabwe is Mozambique.

NZM will undertake detailed feasibility studies to decide between either rail logistics or a slurry pipeline for the most cost-effective export logistics solution. Irrespective of which logistics solution is chosen, Zimbabwe will benefit from a significant investment in infrastructure.

Value
EAHL has committed to an investment of about $750-million, which will include relieving the Zimbabwe government and Zisco of all its liabilities.

This includes guaranteed foreign debt, historic liabilities in respect of trade and other creditors (including unpaid salaries and associated benefits owed to the employees), fixed capital investment for reviving the plant to 1.2-million tons a year of steel production and the working capital requirements of the operations.

Phase 1 of NZS will cost $115-million and Phase 2 $275-million.

It is estimated that the exploration, technology assessment and testing programme of NZM will entail an investment of about $100-million in the first 18 months. Thereafter, depending on the outcome of the technoeconomic feasibility report for the project, EAHL will provide the funding required for the construction of a large-scale beneficiation project and related infrastructure, which is estimated to be in the region of $3.5-billion.

The 20% equity stake of the Zimbabwe government in NZM will be financed by EAHL.

Duration
Not stated.

Client
NZS and NZM.

Key Contracts and Suppliers
None Stated.

Latest Developments
Not stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
EAHL senior VP corporate affairs Manish Kedia, tel +91 98 197 3 0092 or email manish.kedia@essar.com; or corporate communications, Ganesh Pai, tel +91 98 197 3 0225 or email ganesh.pai@essar.com.
Africa Practice Group senior consultant Rishon Chimboza, tel +27 76 895 756 or email rchimboza@africapractice.com.