Mugabe government fires 1000 Ziscosteel workers after $750 million Essar deal flop

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CLOSE to 1,000 New ZimSteel workers will lose their jobs after Finance Minister Patrick Chinamasa yesterday announced their contracts will be terminated on three months’ notice. Presenting the 2016 national budget statement in Parliament last week Thursday, Chinamasa said the move was meant to ensure the now defunct company was attractive to potential investors.

An Indian investor, Essar Africa Limited, has failed to revive the giant iron company, formerly Zisco Steel, since 2011 when it signed a $750 million takeover deal with the government. Essar owes workers more than $200 million cumulatively in salaries and wages of nearly four years.

“The Reserve Bank of Zimbabwe will take over these liabilities so that Zisco Steel becomes attractive to any suitors who may want to invest in the company,” said Chinamasa.essar-l

“Accordingly, all contracts for NewZim Steel employees will be terminated on three months’ notice from December 31, 2015. The government will therefore, through the Ministry of Industry and Commerce, be updating Honourable Members on progress in engaging a new investor.”

Minister Chinamasa could not clarify whether his message signified the collapse of the Essar deal as he hinted on engaging a new investor. New ZimSteel workers have for the past five years been pinning their hopes on the reopening of the dormant firm.

Under the $750 million deal, Essar was supposed to take over Zisco’s foreign debt, which amounted to $300 million, and part of local liabilities. The implementation of the deal also failed to take off due to squabbles over mineral rights and other technicalities.

Experts say the revival of the iron and steel industry is strategic in the country’s economy given its downstream impact. The demise of Zisco Steel has also been linked to the fall of companies such as the National Railways of Zimbabwe and several manufacturing firms in the country.

The takeover was widely publicised with the government and Essar jointly announcing, at the official handover ceremony on August 3, 2011, the launch of two entities, NewZim Steel (Private) Limited and NewZim Minerals (Private) Limited.

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