ZimAlloys shortlists four investors

Published: 14 June 2014

FERROCHROME producer, Zimbabwe Alloys has shortlisted four investors, among them AfroChine Smelting to acquire the majority stake in the company, a source has said.

An audit and advisory firm, Grant Thorton, which was appointed the judicial manager of Zim Alloys is studying the bids after rejecting those placed by local companies after they failed to demonstrate financial capacity to revive the firm.

Zim Alloys operations were closed down in 2008 due to lack of working capital and falling global prices of ferrochrome and may require at least $150 million to upgrade its smelting facilities, a source familiar with the transaction said yesterday.

Ferrochrome, made from smelting chrome ore is used in the production of stainless steel.

"We are closely working with very serious international investors who are at various stages of conducting due diligence," the source said. "Looking at the value of the business, the company needs an integrated recapitalisation approach and investors with deep pockets to rebuild the plant and heavily invest in new technology."

Zimbabwe Alloys, 85 percent owned by Benscore Investments, controls almost 40 percent of the country's chrome reserves, the biggest in the world after South Africa. No comment could be obtained from Mr Reggie Saruchera, the judicial manager.

AfroChine invested about $25 million in building a smelter in Selous and plans to spend an additional $100 million as it seeks to build annual production capacity to 400 000 tonnes.

The company is a subsidiary of Tsingshan Iron and Steel Group of China, now among leading stainless steel producers in the world. "From the AfroChine, they obviously want to combine capacity and leverage on Zim Alloys resources," said the source.

ArceloMittal, the world's biggest steelmaker, was also reported to be considering an offer for Zim Alloys.

RioZim, a diversified resource firm listed on the Zimbabwe Stock Exchange placed a bid for $40 million but failed after the "company failed to show the source of the funds".

Another local bidder, Gombe Resources is said to have offered over $100 million to recapitalise the business but again failed to provide proof of the funds, another source said.

Meanwhile, Zim Alloys said over 1 000 tonnes of metal were recovered from the mine dumps during the first four months of the year. Finance director Mr Munyaradzi Dube told New Ziana that metal recoveries during the first four months of the year surpassed those of last year by 82 percent.

"From January to April, a total of 1 206 tonnes of metal were extracted from the mine's dumps against 661 tonnes produced last year during the same period, translating into an 82 percent increase," said Mr Dube.

The increase was due to hand picking and more availability of working capital, he said.

Last year, RioZim engaged a South African mineral processing firm, Specialised Metallurgical Projects, to extract chrome metal from half of its slag dump estimated at four million tonnes.
- The Herald

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