China makes US$3bn bid for ZISCO

By Violet Gonda
27 November 2006

A Chinese company has offered US$3bn for a 60% stake in financially struggling ZISCO. The state controlled Herald newspaper reported on Monday the bid follows a meeting held between the Government of Zimbabwe and Metallurgical Corporation of China (MCC) officials in October.
Christopher Mutsvangwa, Zimbabwe’s Ambassador to China, reportedly said the MCC had put in an offer for shares in the troubled steel manufacturing company and was now waiting for a response from Harare.
The move would be China’s biggest investment so far in Zimbabwe.
Mutsvangwa was quoted as saying; "After that meeting, MCC worked on the bid to take up a 60 percent stake in ZISCO by injecting US$3 billion. They are very serious about the bid and they are making a follow-up every day. Actually, they are ready to move in as soon as the deal is agreed to by the Government of Zimbabwe.”
Economist Eric Bloch views this as a positive move saying ZISCO needs rescuing, “because it cannot only salvage a very significant operation in Zimbabwe but could enable it to grow very tremendously increasing employment and generating foreign currency.”
But he said until there is a signed agreement this deal cannot be taken for granted. ZISCO used to be the country’s main foreign currency earner until gross mismanagement and corruption resulted in it running at 30% capacity. Senior government officials, including Vice President Joyce Mujuru, have been implicated in a confidential report complied by the National Economic Conduct Inspectorate (NECI).
Bloch said; “Until there are actually signed agreements and implementation we can’t take it for granted. There has been too many cases where there has been a lot of big talk, trumpet blowing and when it comes to the small print the parties don’t reach an agreement.”
He said in particular there is a need to know over what period of time will the US$3bn be injected, and how much will be in foreign currency as against transferral of plant machinery and technological skills.