Local investors eye majority stake in ZimAlloys

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TINASHE MAKICHI

A consortium of local investors is planning to snap up a controlling stake in Midlands-based ferrochrome producer, ZimAlloys. While looking for an investor, the ferrochrome producer has also been soliciting for US$30m in the short term from international financiers for the urgent rehabilitation of its smelters, having shut its door on Indian investor, Balasore Alloys Group.

The local investors consortium, called Landela, is looking at sealing an agreement with ZimAlloys involving the purchase of 68% of the ferrochrome producer,” a source told Business Times.

But ZimAlloys judicial manager, Reggie Saruchera, said he was not aware of any negotiations between ZimAlloys and Landela.

Last year, Saruchera terminated a US$100m investment deal with the Balasore Alloys Group after the Indian company failed to honour its commitments.

While efforts to secure an investor are ongoing, ZimAlloys is also working on its dump which includes one commissioned in 2013 in a partnership with a Chinese firm, Jinan, in a deal worth about US$2.3m.

In addition, ZimAlloys has also started looking at initiatives to secure funding for the refurbishment of its furnaces at the Gweru plant. These initiatives will see the miner engaging its customers and international financiers in raising funding expected to run into millions and will take nine months to complete.

ZimAlloys has devised a turnaround strategy which will see a reincarnation of the company.

Benscore, which is owned by businessman Farai Rwodzi and other partners, acquired ZimAlloys from Anglo-American Company in 2005 before downscaling production and switching off its blast furnaces and started processing its dumps.

ZimAlloys stopped operations in 2008 and was placed under provisional judicial management in July 2014. The company was then put under final judicial management in November the same year after its debt had risen to alarming levels.

However, the bad debt-buying firm, Zimbabwe Asset Management Company, agreed in 2016 to take over RTGS21m worth of ZimAlloys non-performing loans taken from a number of local financial institutions in a bid to clean the company’s balance sheet.

ZimAlloys and Zimasco jointly control the majority of Zimbabwe’s chrome ore deposits, mostly found along the Great Dyke.

The company has since ceded part of its ferrochrome reserves to the government in response to a government directive to both Zimasco and ZimAlloys to cede part of their chrome claims.