Zimasco has long been an important but troubled mining and industrial asset for Zimbabwe. Shifting world metal prices, the need for expensive plant capital investments for which there was no money and political interference in management are just some of the issues that have made the steel and chrome company a perennial under-performer.
Now comes news that the Chinese have taken it over:
Sinosteel Corp, China’s biggest chrome importer, said it acquired 92 pct stake in Zimasco Consolidated Enterprises Limited (ZCE), the Mauritius-based holding company of Zimbabwe’s Zimasco. Under the deal, Sinosteel has the option to buy the remaining 8 pct of ZCE over the next two and a half years, the company said in a statement.
Zimasco is Zimbabwe’s largest chrome producer with annual refined chrome output of around 592,000 tons.
In November last year, Sinosteel signed an agreement to pay more than US $200 million for a 50 pct stake South Africa’s Samancor Chrome Co.
The Chinese will presumably be willing and able to do the plant improvement that has long been necessary but neglected. With virtually complete ownership, they will run it as they see fit for profitability, even if it results in conflicts with locals over managerial styles. Politically they are covered by Zimbabwe being now so dependent on Chinese largesse in many areas at a time when it is in diplomatic isolation from much of the world.
Its interesting that the Chinese have been able to effectively take complete of of an asset long considered a key, if ailing, strategic mining asset at a time of a lot of talk about indigenous Zimbabweans having at least a 50% stake in such investments!
Perhaps in this case the technical detail of the Chinese having bought Zimasco’s off-shore holding company gives them some loophole around the Indigenization Bill. Or just as likely, it could be a case of political rhetoric giving way to the reality of the power of capital!