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Feb 18th
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Essar to revive Zimbabwe's Zisco Steel by Injecting 750 Million USD

Industry and Commerce Minister Professor Welshman Ncube said that Indian Essar Group's subsidiary, Essar Africa Holdings, will inject US$750 million in fresh capital towards the revival of Zimbabwean steel maker Zisco Steel.

Zisco Steel had ceased operating because of capital constraints. For its revival, the Zimbabwe government agreed to sell its majority shareholding in Zisco Steel to Essar last year. Ncube further said apart from recapitalising Zisco Steel, Essar would also assume the entity's huge debt overhang estimated at more than US$300 million.

He said "The agreement provides for Essar to take over and release the government from its debt obligation with respect to external debts owned by Zisco Steel to foreign entities, namely Sinosure of China and KfW of Germany". He added "Zisco is a distressed company completely insolvent; it has debts in excess of US$344 million. It has no value; its debt exceeds its asset value. It has a residual value of about US$45 million," 

He said the revival of Zisco Steel would create jobs and attract foreign investment in the country. "We believe this transaction will serve as a future catalyst for FDI into Zimbabwe. There will be immense tangible results that will accrue to Redcliff arising from the investment being made," he said.

Essar Vice-Chairman Ravi Ruia said with consistent power supplies, Zisco Steel could be restored. "To restart operations at Zisco is a big challenge, we need uninterrupted power supplies," he said. "Essar will take all the necessary steps to achieve that goal." Essar Africa Holdings is a subsidiary of the multinational conglomerate Essar Group which is a major player in
the steel, oil, gas, power, communications, mining, shipping and logistics industries.

At its peak, Zisco Steel was the largest steel maker In Africa. At the ceremony, Essar also announced the setting up pf a us$10 million fund to support the country's small and medium enterprises and women
 and youth business projects. The SMEs sector would get US$5 million from the facility while women and youth projects would receive the remainder. Ruia said modalities for disbursing the resources to the earmarked beneficiaries were being worked out.

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