China has rescheduled to 2013 the debt of Zimbabwe's biggest iron and steel maker following a request by the Zimbabwean government, according to official sources.

Zimbabwean Industry and International Trade Minister Welshman Ncube told Xinhua on Friday that the Zimbabwe Iron and Steel Company (ZISCO) was presently not generating any income and was unable to service its 54.684 million U. S. dollars debt to the Chinese financiers.

The Chinese financiers extended the loan in 2007 to assist ZISCO refurbish one of its blast furnaces.

Ncube said the debt had a repayment schedule of 5 million dollars a year and that the first payment was due at the beginning of last year.

The struggling ZISCO managed to pay around one million dollars, prompting the government to request for debt relief from the Chinese financiers.

"We asked the Ministry of Finance to renegotiate the payment terms on the understanding that by 2013 ZISCO will be fully operational," Ncube said.

He said the government was happy with the debt relief, indicating this would give ZISCO the breathing space to concentrate on refurbishing the blast furnace and improve operations at the company.

"Right now we are still working with the Chinese contractors to refurbish Blast Furnace Number Four," he said, adding the major challenge had been that the company was using the little money generated to service the debt at the expense of perfecting the machine.

Ncube said the government was also scouting for a strategic partner to purchase part of its 88 percent shareholding in ZISCO to inject working capital in the iron and steel maker, which is part of the 40 companies that were slapped with sanctions by the West.

Ncube spoke as officials from China's Eximbank and Sinosure -- a Chinese State enterprise -- signed a memorandum of understanding with the Zimbabwean government on various projects.

The agreement would see Eximbank investing in projects to improve water supply in Harare and the production of fertilizer and pharmaceutical drugs.

Sinosure will provide insurance cover for the projects that will be supported by Eximbank.

The first phase of the program will see Eximbank financing fertilizer supply, medicines, and water chemicals for Harare.

Speaking during a meeting with the Chinese delegation on Thursday, Acting President Joice Mujuru welcomed the debt relief and China's readiness to appreciate Zimbabwe's difficulties.

She said the chosen projects were critical in the revival of the country's economy.

The Sinosure executive vice president and head of the delegation, Zhang Weidong, said the debt arrangement and the three projects they will support opened a broader way of future cooperation with Zimbabwe.

China's cooperation with Zimbabwe has been growing tremendously over the years, with the country providing approximately 300 million dollars in aid to Zimbabwe last year.