NEW DELHI: Jindal Steel and Power plans to re-bid for a controlling stake in Zimbabwe Iron and Steel Company, or Zisco, more than two months after the African company rejected the Delhi-based firm’s earlier bid.
Jindal Steel renewed its offer after the Zimbabwe government recently invited fresh bids for selling 70% equity stake in the state-run Zisco which also owns iron ore reserves of 100 million tonnes. Worries over Zisco’s high debt of $300 million may be behind the second offer for a controlling stake sale, said people connected with the development.
“The Zimbabwe government is aiming for better valuations and so has invited fresh bids. They are trying to make the Zisco deal more attractive to gain higher investor interest,” said the persons cited earlier. As per the new tender, bids from interested parties need to be submitted by September 24. A Jindal Steel spokesperson declined to comment whether his company had submitted the bid.
In May this year, Zimbabwe rejected bids from ArcelorMittal’s South African unit and Jindal Steel and Power on grounds that the two companies were too big to invest in Zisco. “We are a small country and we will have problems with a big multilateral company. The thinking is that we need a medium-sized investor for Zisco,” Zimbabwe Industry and Commerce minister Welshman NcubeNcube was reported as having said.
The Zimbabwe government has been looking for a suitor for the cash-starved Zisco, which had piled up debts amounting to about $300 million. The government invited bids last October that saw large companies like Jindal Steel, ArcelorMittal South Africa and Gateway Zimbabwe putting in their bids. Although the bids were later cancelled, concerns over Zisco’s mounting debts forced the government to re-invite the bids.
The Naveen Jindal-led Jindal Steel has shown interest in the deal because apart from owning huge iron ore reserves, Zisco also owns a 0.8 million tonne steel plant that will build its presence in the African market. Zisco also owns limestone mines with reserves of 60 million tonne. The company’s operations, however, have been stopped since the economic meltdown in 2008.
Jindal Steel & Power has already tied up a couple of foreign acquisitions in recent years. It acquired Oman-based Shadeed Iron & Steel for $464 million this May.
Last October, it bagged a thermal coal mine in South Africa. In 2006, it secured the rights to mine the El Mutun iron ore reserves in Bolivia.