COMMENT: Steel enters Zimbabwe’s soul

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Re-opening Zisco is not renovating an old steelworks; it is a complete rebuild almost from scratch to create a modern steelworks using the latest technologies and this is why it needs a foreign investor, both for the capital required, around $1 billion, and the expertise.

Such an investor has now been found and the Government, the present owner of Zisco, seems prepared to give the Chinese company near total freedom to do what is required to make Zimbabwe a steel producer once again.

Zisco has been sitting there, shuttered and decaying because new investment was never made, and there was a severe shortage of skills at the management end.

Both had to be fixed.

The benefits will be huge. For a start, there will be jobs, probably fewer than before and many quite different, considering the new systems of steel production compared to the old-fashioned ingot product that Zisco once produced.

But there will be real skilled manufacturing jobs and we need as many of these as possible.

There will be other businesses and other jobs, upstream and downstream from Zisco. Upstream someone has to mine iron ore, limestone and coal. Chemical industries in Kwekwe produce oxygen as a by-product and have been suffering from having to throw this away instead of selling it to Zisco.

Downstream, heavy processing industries set themselves up in Kwekwe, next to their raw material supplier, and have also been suffering by having to rely on imports. And finally, all sorts of service and retail businesses in the City of Kwekwe and town of Redcliff will be able to flourish again as real wealth and good jobs are created.

There are some who wonder why a Chinese company is interested in Zisco, considering there is a world glut of steel at present, with the biggest slice of excess capacity being in China.

But the Zisco investment is being made for commercial reasons, not as a political favour, and there are good reasons for such an investment.

Steel might be flooding global markets but there are no steelworks in southern Africa outside South Africa. So in this part of the world there is need for more production. Exports are also possible, at least to close neighbours.

We need to remember that a product made in Zimbabwe from Zimbabwean raw materials meets, and comfortably exceeds, every free trade requirement for local origin, so will attract zero tariffs or duties considerably lower than out-of-region imports.

There is also an advantage of being able to say “tomorrow” when a Zimbabwean customer phones in and orders in a panic, and “Thursday” if the customer is in a neighbouring state.

No one airfreights steel so those wanting to buy from Asian, European or American producers have to place orders many weeks in advance.

Of course the whole project will be useless if quality is substandard and if the wrong mix of products is the output. But a company that can raise $1 billion to invest in the middle of Africa obviously has a good track record and modern steelmaking allows a good product mix with frequent changes, so presumably both conditions can be met.

So now Zimbabwean manufacturers and potential manufacturers are challenged. They will have steel on tap, and not just steel but steel that does not need an import permit, does not need foreign exchange and does not attract customs duties.

Many have been complaining for years. Now they can work with the new Zisco and insure the right product, at the right standard and produced at the right price can be shipped to them on demand.

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