Sherashiya Pty Ltd, a firm established by Indian mining investors, is finalising the purchase of Pula Steel and plans to resuscitate the Selebi Phikwe plant by next month, following the collapse of a previous takeover attempt by local iron ore producer, Vision Ridge.
The developments are the latest in an exhaustive bid to revive Pula Steel, the country’s pioneering steel producer. Pula Steel closed in 2017, just two years after it was built at a cost of P130 million, strained by financial and technical challenges, particularly the shortage of its raw material, scrap metal.
Last year, Vision Ridge Investments, the owner of the Ikongwe iron ore mine near Shoshong, sealed a P16 million with Pula Steel’s liquidators to take over the plant. Vision Ridge intended to produce final steel products for the first time in the country’s history by using scrap iron, sourced locally and externally, as well as iron ore sourced from Ikongwe.
BusinessWeek has learnt that Vision Ridge ultimately failed to raise the funds for the deal, and the Ikongwe Mine has reportedly suspended operations due to low prices of iron ore.
Sherashiya, meanwhile, is waiting on regulatory approvals to restart Pula Steel, its managing director, Gopal Hebbar said on Thursday.
“We are hoping to be operational within 15 days, depending on the regulatory approvals,” he told BusinessWeek.
“Our target is the domestic market, with any surplus going for export.”
Hebbar said the reopened Pula Steel would employ between 80 and 90 workers initially, a figure that includes the small team retained over the years for care and maintenance activities. He said preference for employment would be Batswana in and around Selebi Phikwe.
“Our target is to push towards full capacity of the plant, but that will depend on our ability to source raw material.
“We do hope to expand production, but that also depends on the raw material of which we don’t see too much of it,” he said.
Prior to its liquidation, Pula Steel was fed with scrap metal from BCL Mine and was part of the mine’s life extension plans, known as Polaris II. BCL Mine injected a total of P111.2 million into Pula Steel, before also shutting down in October 2016.
No value has yet been given for the latest deal, while previously BusinessWeek learnt that Pula Steel’s creditors were owed about P100 million. The liquidation process has been beset by challenges including previous suitors who broke the transaction terms as well as lawsuits from the plant’s founders.
