The collapse of a Government and Essar Africa Holdings $750 million deal meant to revive Ziscosteel is still haunting employees of the steel giant who are reeling in debt due to loans they accessed from banks when the deal was signed in 2010.
When the deal was signed, the Essar group issued Ziscosteel employees with letters of guarantee to access loans with various banks.
After the collapse of the deal in 2015 after several false starts, many Ziscosteel workers were left in a quandary and are finding it hard to service their loans.
Some banks have instituted legal proceedings against the employees. Ziscosteel workers committee chairperson Mr Benedict Moyo confirmed the development.
“When the much-hyped Ziscosteel Essar Africa Holdings deal was signed, there was so much excitement and hope, so much that many employees got loans from various banks,” he said.
“In fact, no one thought the deal would collapse. Even banks rolled out loan schemes for the employees.” Mr Moyo said the majority of the workers were facing lawsuits as banks try to recover their money.
He said while Government recently came to the employees’ rescue when it started paying them part of what they were owed by the steel company, the money was being withheld by the banks.
“Employees are getting nothing because most, if not all, the money is going towards servicing their debts,” said Mr Moyo.
“We are however, grateful to the Government because this has spared the workers the embarrassment of losing the little property they have.” Mr Moyo said they were keeping their fingers crossed that Government would secure a new investor to revive the giant steel company.
“There has been many false starts when it comes to the revival of Zisco and we hope this time around it will materialise,” he said.
Ziscosteel, once Africa’s largest steel works, ceased operations in 2008 due to financial constraints. Since then, Government has been scouting for a potential investor.
Finance and Economic Planning Minister Patrick Chinamasa recently announced that Government had identified a potential investor after Government took over the steel company’s $300 million debt.