ZISCO Steel resuscitation critical in iron ore mining in Zimbabwe

By Calvin Manika

Redcliff, a small town in the outskirts of Kwekwe is home to the former steel giant, Zimbabwe Iron and Steel Company (ZISCO). The company was known for its quality steel and various durable structures constructed from its products across the Zimbabwe and Africa. It was formed in 1942, but stopped operations in January 2008, following three successive power outages from the national grid. There were also cooling water challenges leading to the cooling down of Coke Oven batteries and subsequently the cooling down of the Blast Furnace.

The giant steel company which used to employ thousands of workers directly is lying dormant with only the administration team on ground in a bid to resuscitate operations. When the company stopped operations, it had the capacity of producing on million tonnes of steel per year for a foreseeable future estimated at 32.5 years. Residential areas in Redcliff town including Torwood and Rutendo earned a living from the company. Its closure laid them off and left thousands of families stranded. ZISCO also benefitted many companies in the steel value chain industry, both its suppliers and customers which include Hwange Colliery Company Limited, Lancashire Steel and municipalities which supplied water.

ZISCO Steel Company run two subsidiary companies, Buchwa Iron Mining Company mined iron ore at Ripple Creek mine and the limestone quarry situated next to the steel works. The subsidiary company supplied ZISCO with iron ore, as well as the limestone required as flux for the furnace in iron and steel making. Another ZISCO subsidiary company, Lancashire Steel manufactures rods and wire products for manufacturing and agricultural sectors operating 6 plants in the manufacture of wire products. When fully operational, Lancashire Steel produces 45 000 metric tonnes of finished products per annum. The company also supplied wire products to the mining, agriculture, building industries within the region and internationally.

In early 2008, ZISCO steel company was producing less than 12,500 tonnes, far below the break-even capacity of 25,000 tonnes. By 2010, it could hardly pay its reduced workforce. It was wholly owned by the government of Zimbabwe, until in November 2010. Since then, the government courted other investors resulting in 54% of the company being held by the Indian investor – Essar Africa Holdings Ltd. The government of Zimbabwe still holds 36% while private investors’ holds 10%.

In February this year the Cabinet approved Kuvimba Mining House to be the Investment partner for the resuscitation of the Zimbabwe Iron and Steel Company (ZISCO) steel.

Arnold Muganyi, a resident of Torwood in Redcliff says the delay in operationalising ZISCO is not affecting the lives of the residents only but can be a game changer in the supply of steel in Zimbabwe and the SADC region.

“Iron Ore mining will create employment to us; we were laid off more than a decade ago and we are no longer fit, but our children can fit in. But, most importantly, ZISCO made a name because of quality as the company has all set in one place from mining to processing and its capacity to supply has been convenient,” says Muganyi.

In April this year, Industry and Commerce Minister Dr Sekai Nzenza said ZISCO steel is expected to be up and running in the next 12 months as the government was targeting the revival of the company and development of the mining sector. At the meeting between Zisco steel management and Kuvimba Mining House in Redcliff, Minister Nzenza said ZISCO Steel was a national asset and its revival was a priority of the government.

“ZISCO is a national asset and every other industry is either an upstream or downstream industry. This is why the new administration is determined to make sure that ZISCO Steel gets back to its feet in the next 12 months before it gradually gets back to its former glory,” she said.

The coming back of ZISCO steel has a great potential to make Zimbabwe reduce its huge import bill on steel products. This can be achieved through value addition and exports of quality products.

Tadiwananshe Mugugu, a local constructor says the re-opening of ZISCO might reduce the cost of doing business in Zimbabwe

“It can cause the increase in the supply of iron as raw material in construction resulting in reduced prices. It also creates competition which is favourable to our business unlike the current situation where the majority of players are private sector; export receipts will also increase,” says Mugugu.

ZISCO steel board chairman, Engineer Martin Manuhwa, said there would be a US$300 million capital injection to kick-start the revival of ZISCO. The capital injection is expected to grow to up to $1 billion in the next three years. At its peak, ZISCO Steel used to employ about 6 000 people directly and over 50 000 others indirectly. It was one of the largest steel producers in Southern Africa. The government invited bids in April 2021 from investors in a bid to bring back ZISCO Steel.