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Singapore firm buys shares in Maamba By KASUBA MULENGA GOV
By KASUBA MULENGA
GOVERNMENT has signed an agreement with Nava Bharat Singapore (NBS) Plc for the purchase of 65 percent shares in Maamba Collieries in Southern Province at a cost of over K122 billion (US$26 million).
Minister of Finance and National Planning Situmbeko Musokotwane announced this during the signing ceremony held at his office in Lusaka yesterday.
Dr Musokotwane said due to the difficulties employees at Maamba Collieries are experiencing, a decision had to be taken by Government that Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) plc takes over the mine to lay ground for private sector participation.
“This has been done and this is why today marks an important milestone in the history of coal mining in Zambia in general and Maamba Collieries in particular,” he said.
Dr Musokotwane said Government is confident that the sale of 65 percent shares in the mine to NBS Plc will inject a new life in the company and in Maamba district.
NBS Plc is a company incorporated in Singapore with mining and power production operations in India and Indonesia.
The minister said NBS Plc will pay ZCCM-IH a cash consideration of US$26 million for the 65 percent shares in Maamba Collieries.
He said it should, however, be noted that because the liabilities of the coal mine have been increasing, the actual cash consideration payable to Government through ZCCM-IH will be determined by the outcome of the completion audit to be finalised by mid January next year.
Dr Musokotwane said Government through ZCCM-IH will retain 35 percent shares and a golden share in the privatised coal mine to ensure continued development of the firm.
He said because the mine is currently insolvent with credit of over US$50 million, Government will no longer be directly responsible for the liability.
Dr Musokotwane said Maamba Collieries itself under NBS Plc management and part owners ZCCM-IH will work towards liquidating the indebtedness once the company’s cash flows become healthy.
The minister said once the privatised coal mine establishes a track record of profitability and meets listing criteria, up to 25 percent shares will be offered to the public through the Lusaka Stock Exchange.
He said the transaction will ensure that existing jobs at the mine are sustained while those who retired will have their benefits attended to as the company’s operations improve.
Dr Musokotwane said the mine will be redeveloped at a cost of about US$93 million and a further development of a new 300 megawatts thermal power plant will be constructed at a cost of about US$420 million.
“Both Nava Bharat and ZCCM-IH have committed to invest a sum equivalent to US$6 million per annum when Maamba Collieries attains the targeted maximum capacity production of two million tonnes of washed coal per annum,” he said.
The minister said the agreement is good as it clearly protects the interests of both Zambians and the investor and congratulated the negotiating teams that arrived at the equitable deal.
He said the transaction is in line with Government’s commitment to ensuring that the private sector is at the centre stage of economic activities in the country.
Dr Musokotwane said Government’s objective in the privatisation programme is to ensure privately run and viable enterprises are amenable to infusion of new capital investment.
The minister said Government would like to see the private sector playing more significant roles in its social responsibility programmes and urged new owners of Maamba Collieries to plough back into the community.
And NBS plc chairman Ashok Devineni said he appreciated the professional and transparent manner adopted by ZCCM-IH, the Zambia Development Agency negotiating team and Government in the entire process of selling Maamba Collieries.
Mr Devineni said Maamba Collieries has been a loss making company for several years and that it is a stressed company located in a relatively underdeveloped region of the country.
“The task of revitalising the company poses several challenges both at the site and in the geographical region for which Nava Bharat is geared up. We, however, deem that this calls for a well rounded approach involving proactive support and concerted efforts by all stakeholders for a win-win situation to emerge,” he said.
ZCCM-IH board chairman Alfred Lungu said his organisation purchased 100 percent shares of Maamba Collieries in November 2007 and wanted to find a strategic partner to rejuvenate operations at the mine and develop a new thermal power plant.
Mr Lungu said when it reaches full production level, the mine will produce sufficient coal for local consumption and export.
He said investment in a thermal power plant will help cushion the electricity deficit the country is currently experiencing.