“As a group, we look at various growth opportunities but would not like to comment on any specific ones at this point in time,” Essar said, in response to an email sent on the development. The port project work is to be undertaken by the group’s African subsidiary, Essar Africa Holdings, and is not a part of the group’s Essar Ports. “The project is currently on the drawing board,” said a senior company official.
This port will facilitate exports from Zimbabwe Iron and Steel Company (ZISCO), a Zimbabwe-based company it acquired in 2010. Essar spent $750 million for a 56 per cent stake in the company. The group had plans to bring back iron ore from the Zimbabwe company to India.
A port in Essar’s African portfolio would add to its many businesses in the continent. Essar Energy holds 50 per cent interest in the Kenya Petroleum Refinery at Mombassa. It also has telecom operations in Kenya under the brand name Yu, with over three million subscribers.
However, this port will not cater exclusively to ZISCO and Essar. “Mozambique has a lot of coal resources, and that will also be another major source of cargo,” said the official.
When Essar Africa took over the company, ZISCO was a distressed asset. It planned to invest yet another $400 million (Rs 2,176 crore) into the company and get it back to production. The operating levels of the plant were very low. This is apart from developing the vast iron deposits of the company.
While working on the blue print of ZISCO’s revival plan, Essar planned to bring back some iron ore to its Gujarat steel plant, if there was an excess after feeding ZISCO and the local market.
“We have an 80 per cent stake in the minerals joint venture with the government of Zimbabwe and we are allowed to export excess iron ore after feeding ZISCO and the local market,” Firdhose Coovadia, resident director of Essar (Middle East & Africa), had told Business Standard in an interview earlier.
Last year, the company had said they planned to start steel production at ZISCO in 12-15 months time, from the date of getting all the necessary approvals. When acquired, ZISCO was a defunct state-owned steel company which owed its employees $20 million (Rs 108 crore) in wages. The total liabilities of this one-mt capacity steel plant were over $340 million (Rs 1,849 crore).