Fri Dec 18, 2009 8:56pm IST
By Chris Mfula
LUSAKA, Dec 18 (Reuters) - Singapore's Nava Bharat Pte Ltd on Friday took over the running of Zambia's Maamba Collieries, a key coal supplier to Zambia's copper mines, and signed an agreement to build a 300-megawatt thermal power plant.
Finance Minister Situmbeko Musokotwane said Nava Bharat, which signed an agreement with Zambia, Africa's largest copper producer, would pay $26 million for a 65 percent stake in Maamba Collieries while 35 percent of the shares would be retained by the state-run ZCCM-IH.
"The mine will be (recapitalised) at an estimated cost of $93 million and a ... new 300 megawatts (MW) thermal power plant estimated to cost about $420 million will be constructed," Musokotwane said during a signing ceremony.
Musokotwane said Maamba mine would aim to reach maximum output capacity of 2 million tonnes of coal per year in the long term. It has 78 million tonnes of known coal reserves expected to last over 70 years and produced 600,000 tonnes coal during peak production in the 1980s.
He said 25 percent of the shares in Maamba Collieries would eventually be listed on the local bourse with a larger share of that coming from the government's stake once the firm established a track record of profitability.
ZCCM-IH Chairman Alfred Lungu said at the same signing ceremony that the company decided to bring in a strategic equity partner because of the huge investment needed for the recapitalisation of the mine and development of the coal-powered thermal power plant.
Lungu said the investment in the power plant was timely given the power deficit that Zambia was faced with, which had forced state power utility, Zesco Ltd to start to ration power.
Nava Bharat chairman Ashok Devineni also said his company would explore the possibility of building a power plant that could generate more than 300 MW.
"Nava Bharat envisages capital outlay of about $500 million to be funded by a mix of equity and debt on the proposed coal mining project and the 300 MW power project," Devineni said.
"We foresee no problem once we have a bankable power purchase agreement with Zesco," Devineni said.
Initially 10 firms, including London-listed Vedanta Resources Plc (VED.L: Quote, Profile, Research) submitted bids to develop the power stationand be an equity partner in the coal mine. Vedanta is already majority shareholder in Konkola Copper Mines (KCM), which has been a major buyer of coal from Maamba. (Reporting by Chris Mfula, Editing by Shapi Shacinda and Anthony Barker)
Source: http://in.reuters.com/article/mergersNews/idINLDE5BH1FD20091218
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