Zimasco Placed Under Corporate Rescue Over US$77 M...

Zimasco Placed Under Corporate Rescue Over US$77 Million Debt

Zim Now Writer

Zimasco, one of Zimbabwe’s leading ferrochrome producers, has been placed under corporate rescue following a court application by businessman Shepherd Tundiya.

According to court documents, the ferrochrome giant owes over US$77 million to various creditors, including suppliers, the Zimbabwe Revenue Authority, the Zimbabwe Electricity Supply Authority, and its workforce.

Tundiya, who owns Avim, alleged that Zimasco breached a 2017 agreement to procure coke peas—a key fuel source for ferrochrome furnaces—from South Mining in Hwange.

He argued that under the contract, Avim would have supplied 288,000 tonnes of coke peas at US$270 per tonne between August 2017 and August 2023.

“Had Zimasco not breached the agreement, Avim would have delivered 288,000 tonnes of coke peas at US$270 per tonne between August 2, 2017, and August 1, 2023,” Tundiya submitted to the court.

He claimed Zimasco’s failure to honor the contract resulted in losses totaling US$67.5 million over the six-year period.

A confirmation from the Master of the High Court indicated that Zimasco’s liabilities stand at US$77 million. Tundiya argued that the company’s failure to service its debts made corporate rescue a preferable alternative to liquidation.

The High Court agreed, appointing lawyer Wilson Manase as corporate rescue practitioner last Wednesday. This move shields Zimasco from creditor lawsuits while efforts to restore the company’s financial health are underway.

Tundiya further suggested the possibility of bringing in new investors to take over the company, currently controlled by Chinese-owned Sinosteel.

“I am aware that there are potential investors targeting chrome mining due to the spike in demand. Investors with equity financing can be brought on board,” he said.

The corporate rescue intervention comes as Zimasco has been working on expansion plans, including commissioning a new furnace in December 2023 and embarking on a 100MW solar project in Kwekwe.

The company has also pledged to redevelop its mining operations along the Great Dyke. However, despite an annual production of 70,000 tonnes of ferrochrome, Zimasco has faced repeated production halts in recent years, driven by volatile ferrochrome prices and rising electricity costs.

While Tundiya has secured a legal win in this case, his own past has not been without controversy. In 2018, an audit report accused him of using political ties to oust a contractor from Hwange Colliery.

He was also alleged to owe Hwange Colliery US$481,000 for prepaid coal deliveries. In 2019, contractor JR Goddard claimed in court that Tundiya had tried to blackmail him into dropping charges against four MPs accused of soliciting bribes related to a coal mining deal.

Tundiya was later acquitted. In 2020, a magistrate and court clerk were arrested after allegedly facilitating the release of two stolen vehicles to him.