China’s nickel giant, Tsingshan Holding Group, has started production at its $1 billion steel plant in Zimbabwe.

The plant built by Dixon Iron and Steel Company(DISCO), a subsidiary of Tsingshan, will produce 600,000 metric tons of carbon steel annually in the first phase of operations.

“We have started to produce pig iron, which is a raw material used for the production of steel. By July, that’s when we will start to produce the actual carbon steel,” Wilfred Motsi, Dinson Iron and Steel Company’s project director said to reporters.

Tsingshan’s ventures in Zimbabwe

In addition to steel production, Tsingshan has heavily invested in Zimbabwe’s mining sector, including ferrochrome, coking coal, and lithium mining. The company owns a coking coal operation and a ferrochrome smelter in the country that is said to host some of the globe’s largest hard-rock lithium reserves.

Further, the Chinese stainless steel company has constructed a 50-megawatt thermal power. The power station is located at Tsingshan’s steel plant and is expected to augment the power supply at the industrial complex.

“The new thermal power plant is a critical step towards self-reliance in energy. It complements our operations and ensures that our facility can run at optimum capacity without external power supply interruptions,” said DISCO’s Administration Manager, Michael Wang.

Moreover, the gas produced by the steel plant’s furnace will generate additional power which will be used to meet about 20% of the plant’s electricity needs.

Tsingshan also plans to build a solar power plant to further mitigate Zimbabwe’s electricity challenges and allow smooth operations.

Economic impacts of the steel plant

Despite the challenges, this plant once fully operational will be a game changer in Zimbabwe’s iron and steel sector. It will also significantly boost the southern African country’s economy. It will reduce local construction costs by lowering the price of raw materials like steel,

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The plant will also significantly reduce the costs of steel importation into the country. According to the Engineering Iron and Steel Association of Zimbabwe (EISAZ), Zimbabwe has been spending $1 billion annually on steel imports since the closure of the Zimbabwe Iron and Steel Company (ZISCO) in 2008.ZISCO was shut down at the height of inflation in 2008, due to corruption and mismanagement.

A report by the Zimbabwe Economic Policy Analysis and Research Unit on the steel industry noted that the closure of the steel company represents $14 billion in lost potential revenue yearly. This is a massive loss for the country considering in 2022 Zimbabwe’s entire gross domestic product was estimated at only $20.68 billion by the World Bank.

As such the Tsingshan plant is a welcome and much-anticipated project poised to make Zimbabwe Africa’s biggest steel producers.

The plant is expected to raise its steel production capabilities to 3.2 million metric tons in the third phase and up to 5 million tons annually in the final phase.

Moreover, by the time it is fully operational, the plant will directly employ close to 10,000 people.

The billion-dollar plant is also expected to generate $10 million in net revenue during its first phase, a figure that will rise to $4.25 billion in the fourth phase of production.

“Our objective is to first of all satisfy local demand which is already guaranteed because we don’t have any other industry that is producing the steel that we want to produce here,” Joseph Shoko, DISCO’s public relations manager said in a past interview.

“After we have satisfied the local market, we will also focus on our Sadc countries because we want to make sure that the region has enough supply of steel,” he added.

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