Power deal to save Zesa US$55m

Disco Iron and Steel Company, the Chinese firm that is constructing a US$1,5 billion steel processing plant near Mvuma, says a power deal signed with Zesa Holdings Limited on Monday will see the firm extend US$55 million in loans to the power utility.

Zesa will inject the loan into the construction of a powerline linking its plant at Manhize in Chivhu to the national grid.

In an interview with NewsDay Business yesterday, a Disco executive said the 100-kilometre powerline would start at Sherwood near Kwekwe.

Disco injected the facility through Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of Zesa that sells power to the market.

The firm’s projects manager Wilfred Motsi told NewsDay Business that the power utility will repay the loan over five years.

For cash strapped Zesa, the advantage is that it will not be forced to pay cash for the loan, but service the facility through electricity supplies to Disco, Motsi told NewsDay Business.

“We have availed a US$55 million loan facility to ZETDC for the construction of a powerline and the loan will be paid through our usage of the electricity,” he said.

“The duration of the loan is five years, but the reality is that it’s going to be settled in a few years because we will require more power for the plant. The main advantage of giving out that loan is that the powerline will be recorded in the asset book of ZETDC,” he said.

“At completion, our powerline will augment electricity supplies from the ZETDC while at the same time adding key assets on the books of Zimbabwe’s power utility,” Motsi added.

The firm said it targeted to produce 20 million tonnes of carbon steel per annum by year 2030.

It said its firms in Zimbabwe would soon be the largest power consumers in Zimbabwe, requiring over 500MW in the next three years.

Disco is one of the three subsidiaries of Tsingshan Holding Group Limited, which is the world’s largest stainless steel and nickel producer.

The company has a footprint across the world, with production bases in China, Indonesia, India and the United States and now in Zimbabwe.

The company has built a 150 000 tonne per year ferrochrome plant in Selous Chegutu district and a 350 000 tonne per year coke plant in Hwange.

The US$1,5 billion Disco plant in Mvuma is said to be one of the biggest steel processing facilities in Africa.-newsday