Zisco's iron ore may feed Essar's India plant

After successfully concluding the Zisco deal with the Zimbabwean government, Essar Africa Holdings has started working on a blueprint for restarting Zisco’s steel plant and developing its vast iron ore deposits. The company might even ship iron ore to India for its Gujarat plant, if there is any excess after feeding Zisco and the local market.

“We have 80 per cent stake in the minerals joint venture with the government of Zimbabwe and we are allowed to export excess iron ore after feeding Zisco and the local market,” Firdaus Coovadia, resident director, Essar Africa Holdings, told Business Standard. Coovadia said exporting iron ore to India was a possibility, which had to be explored going forward.

He said the idea was to maximise the value for Essar as well as the Zimbabwean government. “Their interest also has to be taken care of. However, the agreement has a clause, which clearly states that we can export iron ore provided we satisfy the local market.”

Buchwa Iron Ore Company (Bimco) is a 100 per cent subsidiary of Zisco. It will be transferred to the joint venture. Bimco has one operational iron ore mine, apart from exploration licences for other iron ore and limestone mines. Both are integral ingredients of steel production.

Essar Africa Holdings did not disclose the quantities of iron ore that the operational mine has. Coovadia said, “We are not disclosing the production figures of the operational mine at this point of time, but exports won’t start anytime soon. Our first aim is to get the plant running and that will take about 15 months.”

Out of the total $750 million that Essar Africa is investing in Zisco, $400 million is for restarting the one million-tonne steel plant and the balance will be used to repay debt.

The company will incur significant expenditure to access the quantity and the quality of the iron ore and other mineral reserves that it got after the Zisco deal. The quantum of these investments are being assessed currently.

Coovadia said, “The agreement gives us the opportunity to export after doing value addition to ore.” This means that the company may have to set up beneficiation and pellet plants at Zisco.

Essar Steel is expanding the capacity of its Hazira plant to 10 million tonnes. The company has no iron ore mines for its own need at this point of time and sources all its requirements from state-owned NMDC and local miners. The company’s global steel making capacity stands at 15 million tonnes.