Status of Maamba Collieries Limited - Parliament
DAILY PARLIAMENTARY DEBATES FOR THE FOURTH SESSION OF THE TENTH ASSEMBLY
Thursday, 8th July, 2010
The House met at 1430 hours
[MR SPEAKER in the Chair]
NATIONAL ANTHEM
PRAYER
MINISTERIAL STATEMENT
STATUS OF MAAMBA COLLIERIES LIMITED
The Minister of Mines and Minerals Development (Mr M. B. Mwale): Mr Speaker, I wish to thank you for giving me this opportunity to address this august House on the status of Maamba Collieries Limited.
The mining company, as you are all aware, was a parastatal that has now been privatised. My address, therefore, will highlight the current status of the operations of the company and the proposed construction of a thermal power plant.
Mr Speaker, may I remind the House that on 25th March, 2010, I gave an update on the status of the Maamba Coal Mine operations. In that statement, I informed the House that negotiations were concluded on 18th December, 2009 when the Zambia Consolidated Copper Mines – Investment Holdings (ZCCM-IH) and Nava Bharat Pty Limited (NBS) of Singapore signed a share sale and purchase agreement. Nava Bharat Pty Limited acquired a 65 per cent equity stake in Maamba Collieries Limited while the remaining 35 per cent is held by ZCCM-IH Plc.
Mr Speaker, the total cash consideration for the sale of Maamba Collieries Limited was US$87 million. However, the liabilities for the company stood at US$98 million dollars. These liabilities included arrears to the Zambia Revenue Authority (ZRA), National Pension Scheme Authority (NAPSA), Scirocco Mining Limited, suppliers, contractors, environmental liabilities and workers’ dues.
The acquisition and transfer of management control to Nava Bharat Pty Limited has been completed and a new board has been appointed. The board consists of a total of five members. Three are from Nava Bharat Pty Limited, one is from ZCCM-IH and the other is from the Government. One of the three Nava Bharat Pty Limited board members is a Zambian.
The 65 per cent shareholding by Nava Bharat Pty Limited includes some minor shareholding by a Zambian consortium.
Mr Speaker, currently, Maamba Collieries Limited is in the process of discharging its liabilities that have been on the balance sheet for a long time. The company paid four months’ salary arrears to 598 employees, amounting to K5 billion and is up to date with salary payments. Outstanding dues to forty-four retirees are being ascertained and paid off.
The company will also pay off any other outstanding dues to trade creditors who are clearly and accurately being ascertained by independent consultants. I am happy to inform the House that from a total of fifty-seven creditors with outstanding liabilities amounting to US$4.4 million, thirty-six creditors have been paid the sum of US$474,061. The company is currently verifying its liabilities for twenty-one creditors with outstanding liabilities amounting to US$3.9 million. The most significant creditor is Scirocco Mining Limited who were contractor miners with an outstanding amount of US$2.6 million.
However, this matter is in the courts of law. Scirocco Mining Limited were not being paid promptly for the mining, processing and haulage of coal to Batoka as per the contract agreement. The amount being owed by the Maamba Collieries Limited accrued to US$2.6 million. This led to the termination of the contract by the contractor who later sued the company for non-payment.
Mr Speaker, currently, Maamba Collieries Limited is rehabilitating the main road leading to the mine and other support infrastructure such as refurbishment of offices. It is expected that these works will be completed by the end of July, 2010.
Mr Speaker, the House may wish to know that the company has already come up with a short to medium-term plan for mine development. Maamba Collieries Limited is expected to start production by mid October, 2010. The total reserves are 78.2 million tonnes of coal out of which 60.2 million tonnes is proven and 18 million tonnes is probable. The lifespan of the mine is more than seventy years at a projected rate of production of 1 million tonnes of run of mine coal per annum.
The company will procure and install one coal processing plant module of fifty tonnes per hour capacity and another of 150 to 200 tonnes per hour. The smaller module will be commissioned by mid October, 2010, in time for the scheduled coal production. The larger module will be completed by mid 2011. The total investment for the coal processing plant will be US$12 million.
Maamba Collieries Limited intends to refurbish the rope way and this will be completed by mid October this year. It is envisaged that this will bring the rope way to its original design capacity of 272 tonnes per hour. The rope way is important because it serves as a link to the railway line at Batoka. In addition, the road infrastructure between Maamba and Batoka cannot accommodate a large number of coal road haulage trucks.
Mr Speaker, I wish to inform the House that Maamba Collieries Limited will construct a 270 megawatt thermal power plant in Maamba at an estimated cost of US$420 million. The thermal power plant project is expected to be commissioned by the year 2014. Nava Bharat Pty Limited is currently negotiating for a power purchase agreement with Zambia Electricity Supply Corporation (ZESCO).
Currently, the company is undergoing rehabilitation in readiness for the resumption of operations. Recapitalisation of the mine is estimated at US$93 million. Once operational, Maamba Collieries Limited will produce 360,000 tonnes of run of mine coal in 2011 and revamp production to one million tonnes at peak production for both the market and the thermal power plant.
Maamba Collieries Limited will, at full production, employ a total of 750 employees from the current labour force of 598. The 750 employees will include 300 employees for the thermal power plant. All the employees have been taken on and there are no retrenchments. However, the managing director, who was on secondment from the ZCCM-IH, has since been recalled.
Mr Speaker, Maamba Collieries Limited will continue with the following corporate social responsibility programmes:
(i) township roads rehabilitation;
(ii) mine pre-school and basic school;
(iii) mine clinic;
(iv) provision of clean drinking water;
(v) provision of drugs to Maamba Hospital;
(vi) ambulance service to the community; and
(vii) sport facilities.
The company intends to expand the above programmes to its surrounding communities.
Mr Speaker, in conclusion, I wish to state that this Government of President Rupiah Bwezani Banda will continue to support and ensure that this key company in the mining sector remains viable.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr Speaker: Hon. Members are now free to ask questions on points of clarification on the ministerial statement that has been made by the hon. Minister of Mines and Minerals Development.
Mr Muntanga (Kalomo Central): Mr Speaker, the hon. Minister mentioned that the liabilities of the company were US$98 million and that the company had been sold for US$87 million. What was the true value of Maamba Collieries Limited for it to have been sold at a much lower amount than the value of its liabilities?
Mr M. B. Mwale: Mr Speaker, the House may wish to know that Maamba Collieries Limited was limping for a very long time. Therefore, we ought to understand that there is no mining equipment. The assets we are talking about are the mineral resource that was available and infrastructure such as buildings. In terms of capital equipment, Maamba Collieries Limited was limping for a very long time.
Mr Speaker, as I have indicated in my ministerial statement, the liabilities such as payments that were due to the ZRA, NAPSA, suppliers and contractors were outstanding for a very long time. Apart from this, there were environmental considerations and forty-four retired employees.
I thank you, Sir.
Mr Sikota, SC. (Livingstone): Mr Speaker, with regard to the thermal power plant that will be commissioned, will excess power to supply to the surrounding communities be generated? How long will this situation be envisaged since we assume there will be expansion of Maamba Collieries Limited and its needs? For how long will that capacity be sufficient?
Mr M. B. Mwale: Mr Speaker, as I indicated in my statement, the thermal power plant will be able to generate 270 megawatts. The hon. Member may also wish to know that ZESCO has a very wide distribution network. That is why the company is negotiating with it to see to it that ZESCO starts buying its power and makes it part of the national grid.
I thank you, Sir.
Mr C. K. B. Banda, SC. (Chasefu): Mr Speaker, were the trade creditors and contractors, who are yet to be paid by Maamba Collieries Limited, covered in the scheme of arrangement that was in place between 2008 and 2009?
Mr M. B. Mwale: Mr Speaker, I would like to assure the hon. Member that there is nothing like double payment to creditors. As I have said, some of these creditors are Government or quasi-Government institutions. This is why they were not covered in that scheme of arrangement. These creditors are ZRA, NAPSA and the last contract miner who was at site.
I thank you, Sir.
Mr Ntundu (Gwembe): Mr Speaker, the hon. Minister mentioned social responsibility in the statement. Is it mandatory for the new owners of Maamba Collieries Limited to espouse social responsibility? Is this stipulated in the agreement?
Mr M. B. Mwale: Mr Speaker, I would like to appeal to my brother that the company is engaged in the coal business and, in line with the modern trends, corporate social responsibility activities are voluntary. This is, basically, to provide service to the communities in which it operates.
I thank you, Sir.
Mr Hachipuka (Mbabala): Mr Speaker, I would like to thank the hon. Minister for this statement. What mechanism has he put in place to ensure that what he has told this House will be implemented as we go along?
Mr M. B. Mwale: Mr Speaker, I would like to reassure this House that Maamba Collieries Limited is so dear to this Government that we are actively monitoring whatever is taking place there.
Mr Speaker, Cabinet has agreed that the principle of use it or lose it will be activated. If we notice that Maamba Collieries Limited is not producing coal, as per programme, I assure the hon. Member that the Government will not hesitate to take serious action.
Mr Speaker, I thank you.
Mr Muyanda (Sinazongwe): Mr Speaker, I would like to find out what measures the Government has taken to prevent the new investors from polluting Kanzinze River and the Kariba Dam that are the only sources of water for the people of the valley who were displaced from the banks of the Zambezi River.
Mr M. B. Mwale: Mr Speaker, I am sure the hon. Member would like to see that the operations taking place in his constituency are environmental friendly. I, therefore, would like to assure him that the Government has institutions such as the Environmental Council of Zambia (ECZ) and the Mines Safety Department that will be monitoring the operations closely to see to it that pollution does not take place.
Mr Speaker, I thank you.
Mr Beene (Itezhi-tezhi): Mr Speaker, according to the hon. Minister’s statement, Maamba Collieries Limited will hold two businesses by providing coal for the power station and other uses. What is the estimated lifespan of the mine?
Mr Speaker: Order!
The hon. Member did not listen because that question was answered. The hon. Minister said the lifespan of the mine is more than seventy years. Do you need to hear more?
Laughter
Dr Machungwa (Luapula): Mr Speaker, I would like to congratulate the hon. Minister on this encouraging statement presented to the House.
I would like to know what attempts the Government is making to bring investors such as this one to the potential mines that are in the Luapula Province.
Mr M. B. Mwale: Mr Speaker, verily, the ministerial statement was on Maamba Collieries Limited, but the hon. Member has cleverly put his question across.
Mr Speaker, this Government is aware that the restricting factor in the development of mines in the Luapula Province, where there are vast manganese and copper resources, is power. This is why the Ministry of Energy and Water Development is seriously working to see to it that the power levels are increased to sustain mine development even in the Luapula Province.
I thank you, Sir.
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