JSPL to bid for 60% stake in Zimbabwe steel firm Zisco

NEW DELHI: Naveen Jindal-owned Jindal Steel and Power has launched a bid to buy a 60% stake in ailing Zimbabwe Iron and Steel Company ( Zisco) in a deal that will deepen its presence in Africa and secure it significant iron ore reserves.

JSPL was drawn to the deal because the government-owned Zisco owns iron ore reserves of 100 million tonne, said Africa business head Ashish Kumar. "Since we are already operating in Mozambique and South Africa, the acquisition of Zisco would give us a wider reach in the continent," he said.

Zisco also owns a 0.8 million tonne steel plant, shut since 2008, and limestone reserves of 60 million tonne.
Mr Kumar declined to reveal the size of the deal, but steel industry experts pegged it at around $200 million. JSPL is expected to fund the transaction through a mix of debt and internal accruals.

The JSPL deal, however, is subject to the Zimbabwe government clearing all outstanding liabilities of Zisco. "In our proposal, we have suggested a mechanism to the government to settle the existing debt," said Mr Kumar.

The Zimbabwe government has been looking for a suitor for Zisco for sometime. It invited bids last October that attracted JSPL and ArcelorMittal, the world’s largest steelmaker. The bids, though, were cancelled last month, reportedly on the pretext that the two entities were too big and the government was looking for a medium-sized investor for Zisco.

But worries over Zisco’s mounting debts forced the government to re-invite the steel companies. It is unclear if ArcelorMittal has submitted a bid again.

If the Zisco deal succeeds, it will be the latest in a string of foreign acquisitions in recent years that JSPL has concluded. The company acquired Oman-based Shadeed Iron & Steel for $464 million a few weeks ago.

Last October, it bagged a thermal coalmine in South Africa that has reserves of more than 50 million tonne. In 2006, JSPL secured rights to mine El Mutun iron ore reserves in Bolivia.