eBusiness Weekly
Martin Kadzere
Zimbabwe Alloys is looking at raising working capital to resume ferrochrome production, while targeting to double raw chrome exports in the next three months, according to a senior source with the mining group.
This funding search follows the “cancellation” of a deal between ZimAlloys and Indian firm, Balasore Alloys, which had agreed to take over its majority stake in a transaction worth $90 million.
ZimAlloys, one of the country’s largest chrome miner and smelter is under judicial management.
Broadly, the transaction involved the settlement of pre-judicial management liabilities, acquisition of 70 percent shareholding of ZimAlloys by Balasore Alloys and injection of working capital for the refurbishment of the ferrochrome smelter.
Balasore was also looking at investing $300 million in ZimAlloys in the medium term. ZimAlloys terminated the deal, arguing Balasore had failed to pay for the shares. This resulted in the Indian firm approaching the High Court seeking an interdict.
The High Court ruled in favour of Balasore after it prohibited the judicial manager from cancelling the court ruled scheme of arrangement or engaging new investors.
Balasore argued ZimAlloys was yet to meet conditions precedent, which include obtaining regulatory approvals, securing an export license for chrome ores, guaranteeing the secretarial documents are up to date and providing proof of claims ownership.
However, in appealing the ruling, Zim Alloys said the High Court had grossly erred in holdings that the application before it was urgent when it was apparent that Balasore had been notified on breaching the provisions of the scheme of arrangement, which led to termination of its bid on April 3,2018.
It argued the High Court further erred grossly in finding that the arrangement could not be terminated and that there was no legal justification for Balasore to make payment on account of the alleged non-fulfilment of the conditions precedent.
“We are now exporting 30 000 tonnes of raw chrome and we are hoping to double exports in the next three years,” said an official at ZimAlloys who requested not to be named.
The source said the company was also negotiating for the lines of credit with unnamed financial institutions to fund the resuscitation of the ferrochrome furnaces.
A scheme of arrangement was also being looked into to pay off some of the creditors “very soon”. Efforts to get an official comment from ZimAlloys proved fruitless by the time of going to print.
ZimAlloys was founded in 1949 by a consortium led by John Brown Group. In 1965, it was taken over by Anglo America Corp, which it disposed of to Benscore Investments 40 years later. ZimAlloys was the first company in Africa to own ferrochrome plant.
The company holds about 20 000 hectares of chrome claims in different parts of the country, which has proven resources of 72,25 million tonne of chrome ore. Apart from this, Zimbabwe Alloys Chrome, a wholly-owned subsidiary of ZimAlloys owns a ferrochrome smelter. Of its claims, only 15 percent has been explored.
Zimbabwe holds the world’s second largest chrome ore reserves after South Africa.
