Mys­tery deal to re­vive long-dead steel­works

Chi­nese real es­tate firm with no ex­pe­ri­ence in sec­tor pledges $1bn to mill


HINESE firm R&F plans to in­vest $1 bil­lion in Zim­babwe Iron and Steel (Zisco steel), in the lat­est at­tempt to re­vive the mori­bund steel­maker, once the largest in­te­grated steel­works in the re­gion, which shut in 2008.

In­dus­try Min­is­ter Mike Bimha said steel out­put was ex­pected to re­sume within 18 months once ne­go­ti­a­tions have been com­pleted.

“We are look­ing at an ini­tial in­jec­tion of over $1bn and it will prob­a­bly come to $2bn when we pro­ceed. It’s not a small project, but a huge project and a lot of work is to be done,” Bimha told jour­nal­ists at State House where R&F founder Zhang Li re­cently met Pres­i­dent Robert Mu­gabe.

At Zisco, the fur­naces have long gone cold and been silent and the red smoke no longer rises from its chim­neys.

Mean ba­boons fight for food out­side what used to be the HR depart­ment as if to re­mind us of the greed that de­stroyed what used to be one of the coun­try’s big­gest em­ploy­ers.

The de­cayed con­veyor belt run­ning across the road and up the hill doesn’t go anywhere any more.

With the rust-caked shell where wild an­i­mals and des­per­ate scrap scav­engers roam, talk of re­viv­ing

CZisco overnight can only be de­scribed as rhetoric. Zisco steel was once Africa’s big­gest in­te­grated steel maker. It folded op­er­a­tions in 2008 be­cause of gross mis­man­age­ment and a fail­ure by the state-owned firm to keep abreast with ad­vanc­ing tech­nol­ogy, ac­cord­ing to an­a­lysts.

The African unit of In­dia’s Es­sar Group agreed to buy 54% in the steel maker in Novem­ber 2011, in a deal worth $750m, but the deal col­lapsed in 2015 as a re­sult of squab­bles be­tween the part­ners over own­er­ship of min­eral claims.

Bimha said noth­ing of the steel­maker’s debt over­hang which haunted the Es­sar deal. Zisco steel’s for­eign and lo­cal debt stood at $450m on March 31, 2014.

De­tails of the new­est deal have not been made pub­lic but the scale of in­vest­ment sug­gests R&F would have con­trol of Zisco steel’s stock, mak­ing it Zim­babwe’s first sta­te­owned com­pany to be pri­va­tised.

Its re­vival would also pro­vide a boon for an­other state-owned com­pany, Na­tional Rail­ways of Zim­babwe, as 60% of its busi­ness came from trans­port­ing coal to Zisco steel.

The steel­maker’s lat­est an­gel in­vestor is one of China’s rich­est busi­ness­men, Zhang Li, whose net worth is $3.3bn.

He heads the Guangzhou-based R&F prop­erty com­pany.

R&F has been in the news re­cently – the com­pany said it had teamed up with an­other Chi­nese firm, CC Land – to buy Nine Elms Square in London in a deal worth £470m ($624m).

It also re­cently bought 77 ho­tels from Wanda, an­other Chi­nese firm, as part of a $9bn deal.

R&F is listed on Hong Kong’s stock ex­change and is of­ten re­ferred to as one of the “five South China tigers”. It has an es­ti­mated mar­ket value of $6.7bn. If the R&F’s deal goes through, it would be the largest sin­gle for­eign in­vest­ment into Zim­babwe’s trou­bled econ­omy.

An­a­lysts, how­ever, are ask­ing why a Chi­nese real es­tate com­pany, with no trace­able ex­pe­ri­ence in met­als or re­sources, is con­sid­er­ing spend­ing at least a $1bn on this 75-year old steel plant, or what­ever is left of it.

“With such an es­tab­lished name in real es­tate, own­ing prop­er­ties man­aged by top brands such as Hy­att Ho­tels, ac­quir­ing and run­ning a rusty old steel plant in Zim­babwe seems rather out of step,” said Mguni Maen­zanise, an econ­o­mist.

Even as China tight­ens con­trols on how its com­pa­nies in­vest abroad, R&F is branch­ing out, out­side its core busi­ness, and Zim­babwe may be one of its first ex­per­i­ments.

Even more un­cer­tain is what ex­actly it is that the Chi­nese com­pany would be buy­ing – the steel mill alone or ac­cess to Zisco’s iron ore de­posits?

On the sur­face, it is hard to see what R&F would have found at­trac­tive about the aged plant. By Bimha’s own ad­mis­sion this week, Zisco is now ob­so­lete.

“Much of what is there at Zisco won’t be used and their en­gi­neers have proved that prob­a­bly it is about 15 to 20% of what is there that they will be able to use. Much of it is no longer in a state to be used,” Bimha said.

R&F would have to build a new plant.

The pre­vi­ous in­ter­ested in­vestor, Es­sar Africa, had orig­i­nally planned to spend $750 000 on a 1 mil­lion­ton plant.

The com­pany later an­nounced it would in­stead build a 500 000 ton steel plant for $650m over a pe­riod of two years.

For such an es­tab­lished real es­tate group, own­ing a rusty old steel plant in Zim seems out of step


Chair­man of China’s Wanda Group Wang Jian­lin (R) talks with Chair­man of R&F Prop­er­ties Li Sze-lim (L) dur­ing the sign­ing cer­e­mony for the strate­gic part­ner­ship be­tween Wanda Group, Sunac and R&F Prop­er­ties Group in Bei­jing on July 19, 2017.

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