INDIAN steel giant Essar Africa Holdings has started joint exploration of Mwanesi ranch in Chivhu with the government in a bid to ascertain the amount of iron ore deposits in the area, Deputy Mines Minister Gift Chimanikire has said.
The development is part of efforts to help conclude the stalled takeover of Ziscosteel by Essar Africa.
Essar acquired a 54 percent stake in Zisco Steel (now New Zim Steel) in 2011 but delays in trans­ferring mineral rights to Essar have stalled resumption of operations at the Redcliff-based steelmaker.
But it later emerged that the iron ore claims at Mwanesi Ranch were owned by for­mer Zisco employee, Roderick Mumbire, through a company called Bearable Prospects but were later recovered by the State.
The government then indicated that it could not transfer to Essar the iron ore reserves at Mwanesi without knowing the exact amount of the deposits in the area.
Some estimates put the value of the mineral resource there at $30 billion.
Deputy Minister Gift Chimanikire told New Ziana that the exercise was part of efforts to plug loopholes in the deal.
“We have now started a joint venture exploration with Essar in the Mwanesi area so that we know the exact amount of iron ore that we are giving these guys,” he said.
“For long now we have relied on unofficial estimates so we are conducting this exploration exercise so that we put to rest this issue. We hope to conclude soon and hopefully operations will then
resume at Zisco.”
He said the Government was committed to ensuring the deal sailed through.
The Essar Group is also understood to have indicated that it would only resume operations at New Zim Steel once they were given a guarantee of ownership at Mwanesi.
Essar, through New Zim Minerals, owns 80 percent of iron ore claims at Buchwa Mine, Ripple Creek and Mwanesi Ranch, while 20 percent is owned by the Government.
Essar has, however, rejected reserves at Buchwa Mine, saying they were “too deep to exploit”, while those at Ripple Creek were not sufficient to recoup their investment.
Once implemented, the investment is expected to turn around the fortunes of Redcliff town and also improve the welfare of over 3,500 workers left jobless after operations ceased.
Ziscosteel, once the biggest integrated steel works in Africa north of the Limpopo, stopped operations in 2008, choking under a $340 million debt and other viability problems.Advertisement