Zimbabwe: IDC, Chinese Deal Collapses

Date: 28 July 2009

Harare — THE Industrial Development Corporation will go it alone in refurbishing the flat glass plant in Kadoma after the deal with a Chinese investor to revive the country's second largest glass factory collapsed.

The refurbishments of the 16-year idle National Glass would have involved modernising the factory through conversion of the old vertical system to horizontal.Part of the old plant would have been demolished to pave way for conversion of the infrastructure to suit the new technology.

However, IDC pulled out after realising the costs for rehabilitation, which were to be split between the two companies, were "almost" equal to the costs of building a new factory.

More than US$60 million was required to rehabilitate the plant. "The cost of building a plant was almost the same as the costs of reviving the plant. So we decided to pull out," general manager Mr Ndudzo said.

"We are now looking at ways to revive the plant on our own. If the exercise goes well, we should start producing cutlery glass, construction glass, container glass and partitioning glass," added Mr Ndudzo.

National Glass was set up by IDC, a State-run entity established to spearhead industrialisation, and its technical partner Romsit from Romania in 1990. The glass firm, however, closed shortly afterwards as it produced poor quality glass, which cracked due to overheating, a factor that was blamed on Romsit.

Romsit denied responsibility resulting in IDC seeking recourse at the International Chamber of Commerce, which ruled that the failure by Romsit to rectify the defects in the plant, was responsible for the damage incurred at the project.

It was then established that IDC was entitled to the rehabilitation costs of the glass project incurred in financing the reconstruction of the plant. Romsit appealed against the judgement by the ICC, which prompted IDC to take the case to the Romanian Supreme Court, which ruled in its favour.

Despite the ruling Romsit failed to heed the judgement by the Romanian Supreme Court resulting in IDC seeking the guidance of the Paris-based International Court for the Settlement of International Disputes. Apart from the Kadoma plant, which specialises in manufacturing glazing or flat glass, IDC also has another glass manufacturing company, Zimglass, a container glass factory in Gweru.

Zimglass has two furnaces, one of which is owned by Headend Enterprises (Private) Limited, a joint venture between IDC and Delta Corporation.