Message Lun 4 Oct 2010 18:21

Zambia's CEC mulls rights issue to raise project cash

Zambia's CEC mulls rights issue to raise project cash
Mon Oct 4, 2010 4:10pm GMT

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* Wants to raise about $30 mln through rights issue

* Also looking to invest in DRC, Zimbabwe

By Olivia Kumwenda

JOHANNESBURG, Oct 4 (Reuters) - Zambia's sole power distributor to the country's mines will consider offering a rights issue to raise money for building a 40 megawatts (MW) hydro-power plant, a senior company official said on Monday.

Copperbelt Energy Corp. (CEC) said last month it had completed a feasibility study on the Kabompo hydro-power plant planned for the copper-rich north-western region of Zambia and expected to cost $120 million.

Michael Tarney, the CEC managing director for corporate development, said the company would partly finance the project and it was also evaluating proposals from interested financiers.

"You have to see who gives you the best proposal... but part of the funding is equity so we are considering doing a rights issue to raise about $30 million," Tarney said on the sidelines of an investor conference in Johannesburg.

"If we decide to go ahead with the rights issue, it should be done around mid-2011."


Construction of the power generation project is expected to start in 2012, with its commissioning expected by 2015, Tarney said.

A government minister said in July that Zambia, Africa's top copper producer, is confident new power supply projects would come on stream in time to meet rising demand from its mines. [ID:nLDE6660VR]

Demand for electricity by the mines is estimated to rise to 1,000 MW within five years from about 800 MW following a rally in copper prices that has prompted mining companies to invest in new copper projects in Zambia.

Tarney said the CEC is also looking at Zambia's neighbours for more power generation investment opportunities.

"We are looking into (the Democratic Republic of Congo) and in the long term Zimbabwe is a very good market for power, it has a very strong mining industry," he said.

Foreign mining companies operating in Zambia include Toronto-listed First Quantum Minerals (FM.TO: Quote) and Equinox Minerals (EQN.TO: Quote) (EQN.AX: Quote), London-listed Vedanta Resources Plc (VED.L: Quote), Glencore International AG of Switzerland [GLEN.UL] and South Africa's Metorex (MTXJ.J: Quote). (Editing by Shapi Shacinda and Sue Thomas)