Zimasco reclaims Kwekwe plant

TINASHE MAKICHI

Zimasco has taken back control  of its West ferro-chrome plant in Kwekwe following the expiry of a five-year lease agreement between the mining and smelting company and  South African firm Portnex International three months ago, Business Times has established.

Well-placed sources at Zimasco, which is owned by Chinese firm Sinosteel Corporation and operates chromite mining units in Shurugwi, Lalapanzi, Mutorashanga and Guinea Fowl, said Portnex had intentions to purchase Zimasco’s three furnaces at Western plant.

But, due to the acrimonious relationship that existed between the two parties, Zimasco has decided to take back control over its Western operations.

There have also been disputes over the company’s alleged failure to pay rentals to Zimasco.

At one time Zimasco accused Portnex of having failed to fulfil its obligations under a lease agreement.

Portnex, on the other hand, had felt cheated saying Zimasco did not disclose that the company was heading for judicial management.

At one time, the plant had to be shut down after Portnex failed to settle electricity power obligations.

Sources said Zimasco will soon reopen the plant.

However, it has emerged Portnex has taken the issue to court.

“Zimasco is now on site following the expiry of Portnex’s lease (in December 2020) and as you are aware Zimasco is back to full production. There is still a case in the courts but the ferrochrome producer has since taken over its Western Plant operations,” one source said.

Efforts to get a comment from Zimasco spokesperson Clara Sadomba were fruitless as her mobile number continuously went unanswered.

Portnex International was operating three of Zimasco’s furnaces under a five-year lease agreement valued at US$12m. 

In addition to leasing furnaces, Zimasco also provided Portnex with support services on a cost recovery basis.

These support services include a laboratory, weighing, sizing and crushing, transport, security and secondary metal recovery.

Zimasco also allowed its mining contractors to supply chrome ores from Zimasco’s claims to Portnex in the interim period as Zimasco prepared to resume its furnace operations.

Zimasco was placed under judicial management in 2016 after failing to service its debts which had ballooned to about $65m in 2015 from about $38m in 2009. Reggie Saruchera was appointed the judicial manager.

Resultantly, the miner stopped operations leading to the switching off of its furnaces at the Kwekwe refinery.

Zimasco exited receivership in 2018 after posting a US$160m in turnover and a profit of US$45m.

It is understood that Zimasco is also planning to set up a multi-million dollar smelting complex in Mberengwa as the company advances its chrome value addition thrust.

There are indications that Zimasco is looking at investing close to US$80m in a new furnace smelting facility in the medium-term.