Jindal Steel & Power Ltd (JSPL) and Arcelor Mittal are the only two runners in the race to acquire a majority stake in Zimbabwe Iron & Steel Company (Ziscosteel), the largest steelworks in the African country. Ziscosteel is 89 per cent-owned by the Zimbabwean government which is looking to divest a 60 per cent stake as part of its privatisation programme.
Although it is not clear how much the deal would fetch the Zimbabwean government
Ziscosteel has an annual capacity of 1 million tonnes and is a facility for long products used in the construction sector. According to sources within the steel industry a greenfield facility of the same capacity would cost anywhere from $600 million to $1 billion.
JSPL has been scouting for raw material assets according to sources, the qualifying round has concluded followed by due diligence before bids will finally be submitted.
Ziscosteel has debt estimated at around $300 million. The plant ceased operations in 2008. Even at that stage – before the economic crisis - it was operating at less than break-even capacity. Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe.
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