STATUS OF MAAMBA COAL MINE OPERATIONS
Posté: Mar 13 Oct 2009 17:04
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DAILY PARLIAMENTARY DEBATES FOR THE FOURTH SESSION OF THE TENTH ASSEMBLY - Friday, 2nd October, 2009
MINISTERIAL STATEMENT
STATUS OF MAAMBA COAL MINE OPERATIONS
The Minister of Mines and Minerals Development (Mr M. B. Mwale): Mr Speaker, I thank you for the opportunity to address the House on the status of Maamba Coal Mine operations following a point of order raised by the hon. Member of Parliament for Sinazongwe, Hon. Raphael Muyanda, on Tuesday 29th September, 2009 over the withdrawal of labour at Maamba Mine. I would also like to take advantage of this opportunity to correct the wrong impression created by the hon. Member of Parliament for Sinazongwe that US $5 million meant for resuscitation of operations at Maamba Mine had disappeared as reported in The Sunday Post newspaper of 27th September, 2009.
Sir, in order for me to logically inform the House, I wish to give a brief background of Maamba Collieries Limited (MCL). This company has been in existence as a mining entity for over forty years. Before the take-over by Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) Plc, the mine had produced approximately 15.2 million tonnes of Run of Mine (ROM) coal.
Mr Speaker, from inception, in 1969, up to 1991, MCL operated a profitable mine venture. However, from 1991 to date the mine has faced enormous financial and operational problems that have significantly affected its profitability and its going concern status. Since 1991, the mining operations have been on and off and with insignificant production output and high cost structure. This prompted the Government to sale 100 per cent shares to ZCCM-IH Plc in 2007 with a view to resuscitating the operations at Maamba.
Mr Speaker, it must be noted that the major consumers of Maamba coal had been traditionally the copper smelters on the Copperbelt and Chilanga Cement Company now Lafarge Cement Zambia Plc. You will note that the start of problems at Maamba coincided with the operational difficulties of the Zambia copper mining industry in the period prior to privatisation. It was during this period that ZCCM was operating unprofitably owing to the low copper prices on the international market, high production costs, liquidity problems requiring frequent bail-out from the Government, lack of recapitalisation and subsequent fall in our copper production.
Sir, Maamba Mine was not producing significant coal to cover its operating cost, including the payment of staff salaries prior to the Government’s decision to sale the mine to ZCCM-IH Plc in order for it to recapitalise the mine and make it a profitable mining venture once again. To resume sustainable and profitable mining operations at Maamba, ZCCM-IH Plc and MCL management considered two options:
(a) procuring new mining equipment to replace the old and obsolete equipment in order to facilitate improved mining operations by MCL; or
(b) engaging a contract miner who would bring in all the required mining equipment as an interim measure before finding an equity strategic partner to develop the mine
Mr Speaker, the preferred option by management was to engage a mining contractor. In the initial bid for contract mining, Keren Mining Limited was picked as the mining contractor. However, because Keren Mining Limited failed to mobilise the required mining equipment and commence the operations as per contractual agreement, the contract was terminated in December, 2008. Replacing Keren Mining Limited, Scirocco Enterprises Limited was selected among the other three bidders. Scirocco Enterprises Limited started mining operations in January, 2009. In the period during which ZCCM-IH Plc was sourcing for a contract miner, a loan of US $5.3 million was provided by ZCCM-IH Plc to Maamba Mine management to facilitate the resumption of operations. The Maamba Mine Board of Directors in March, 2008 approved the operation business plan that required the refinancing of mining operations at US $7,336,254. However, ZCCM-IH Plc was only able to secure US$5.3 million which was utilised towards the stated objective.
Mr Speaker, the loan provided by ZCCM-IH Plc to Maamba mine management was utilised as follows:
Use Amount (US$)
Mobilisation fee to contractor 500,000
Fuels for operations 71,883
Salaries and wages from August, 2008 to April, 2009 1,872,000
Coal washing plant repairs and maintenance 583,547
Ropeway repairs 148,974
Weighbridge procurement 72,067
Pit electrification 26,138
Protective clothing 66,331
Vehicles for operations 627,247
Laboratory equipment 66,220
Electricity from August, 2008 to April, 2009 274,929
Operating expenses from August, 2008 to April, 2009 663,016
Total 5,300,000
Coal production started in the last week of April, 2009 and continued uninterrupted for three months leading to Run of Mine coal production total of 88,955 metric tonnes coal. During this period, overburden removal continued which included excavation of soft overburden, hard overburden and re-handling of previous operation in-pit dumped material.
Maamba coal mine has currently, on site, 40,000 tonnes of washed coal equivalent, in value, to K16 billion ready for marketing and 8,000 tonnes raw coal equivalent, in value, to K2 billion at the washing plant stock pile.
Mr Speaker, from the foregoing, it is clear that US $5.3 million was used to recommence coal mine operations at Maamba, as opposed to the allegations made by the hon. Member for Sinazongwe. You may wish to know that the hon. Member for Sinazongwe was fully briefed on the US $5.3 million expenditure before he even raised that allegation in the House.
Mr Speaker, currently, Maamba Collieries Limited has 446 permanent employees and 105 on contract. This constitutes 551 employees directly engaged with coal mine operations which is termed as core business. The other seventy-five permanent employees and forty-five on contract constitute 120 employees engaged in the running of the private school, Izuma Lodge, training centre and township services.
Prior to 2009, Maamba Collieries Limited has relied on borrowed funds from the ZCCM-IH for staff salaries. It was envisaged that with the resumption of operations, Maamba Mine would manage to meet its own obligations. In this initial production phase, Maamba Collieries Limited has experienced difficulties in marketing the coal produced from its operations in time, giving rise to severe financial constraints leading to Maamba Collieries Limited’s failure to meet staff salaries and payment to the contract miner. Maamba Collieries Limited lost its traditional local market due to its unreliable coal production which led its customers to source for coal from outside coal producers.
Mr Speaker, it should be noted that Maamba Collieries Limited has stepped up its efforts to market its coal to raise revenue in order to quickly resolve the issue of salary arrears as well as normalise operations. To this effect, management has signed coal sales contracts with Lafarge for 10,000 metric tonnes worth K10 billion for delivery up to December, 2009 and Zambezi Portland Cement for 4,000 metric tonnes per month worth K1.2 billion every month among other orders. Maamba Management has also clinched orders from the Democratic Republic of Congo of about 4,000 metric tonnes worth K1.2 billion and Malawi for 3,000 metric tonnes worth K900 million. Apart from marketing the coal which is on site, Maamba Collieries Limited is actively looking for other forms of finance in the interim and is committed to paying the salary arrears as soon as possible.
Mr Speaker, it should be pointed out that during the period June to September, 2009, Maamba Coal Mine has, at least, managed, from its constrained cash flow, to pay salary advances to its employees. The advances that have been paid were applied uniformly to all employees including senior managers. The House may wish to know on 25th September, 2009, the employees were paid at a rate of 70 per cent of their September salaries. Unfortunately, employees decided to withdraw labour on 29th September, 2009.
Mr Speaker, currently, the Maamba Collieries Management is negotiating with the employees to resume work as management and the union are working at addressing the issue of paying the salary arrears.
Mr Speaker, as alluded to earlier, the major consumers of coal were the smelters on the Copperbelt. However, with the change in smelting technologies, the smelters on the Copperbelt are not consuming huge quantities of coal as before. For example, the Nkana Smelter which used to consume huge quantities of coal for its smelting operations is on care and maintenance, having been replaced by a more modern plant at Nchanga which does not use coal. Therefore, ZCCM-IH plc has been vigorously looking for a strategic equity partner for the development of Maamba Mine and a thermal power plant at Maamba to create a ready market for Maamba Coal. The Zambia Development Agency (ZDA) Negotiating Team, in line with the ZDA Act, is carrying out negotiations with the preferred bidders to partner with ZCCM-IH plc in the development of Maamba Mine and thermal power plant. The negotiations have reached an advanced stage and, once concluded, will be submitted to the Committee of Ministers prior to presentation to Cabinet and before any announcement of the results of these negotiations can be made public.
I thank you, Sir.
Mr Speaker: Hon. Members are now free to ask questions on points of clarification on the statement which has been made by the hon. Minister of Mines and Minerals Development.
Mr Muyanda (Sinazongwe): Mr Speaker, I would like to know why the Government has failed to privatise Maamba Collieries from 1991 when other mines were privatised and when will you precisely pay the workers of Maamba Collieries the arrears that they have accumulated arising from the inefficiency of the prevailing management?
Mr M. B. Mwale: Mr Speaker, I am a bit surprised that the hon. Member for Sinazongwe does not seem to have followed my statement which is very clear on the matter. It is not due to the inefficiency of Maamba Mine Management, but that we lost the local market which is our traditional market for coal. As outlined in my statement, Maamba Collieries has made headways in finding a market for the coal. In the interim, as clearly put in my statement, management contacted a contract miner who could mine the coal and keep our people in employment rather than out of employment.
I thank you, Sir.
Mr Simuusa (Nchanga): Mr Speaker, US $5 million is a lot of money. As we are talking now, workers have not been paid for four months and as for the coal on the ground, one of the customers, the largest customers, has refused to get it because it is poor grade and the contractor who was on site, as of yesterday, has pulled his equipment out of Maamba Collieries. Would the hon. Minister tell me what the way forward is in the short term because we are sitting on a time bomb?
Mr M. B. Mwale: Mr Speaker, I would like to state that it is statements like that, coming from the hon. Member for Nchanga, which cause problems in our country. There is no time bomb and if you followed the statement which has been issued in this House, I stated that management of Maamba Collieries is doing everything possible to source funds.
I have clearly stated in my statement that management is doing everything to ensure that the employees are paid their salary arrears. May I restate that the employees were being paid salary advances and, as of September, 2009, they were paid 70 per cent of their salaries, which is not the same as not being paid anything.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr D. Mwila (Chipili): Mr Speaker, the Zambia Consolidated Copper Mines Investments Holdings (ZCCM-IH) has failed to run Maamba Collieries Limited and that is the reason it wants to bring in a new investor. From 2000…
Mr Speaker: Order! Can you ask your question, please?
You may continue.
Mr D. Mwila: It is now nine years down the line and the ZCCM-IH has failed to find a new investor.
Mr Speaker: Order! What is your question?
You may continue.
Mr D. Mwila: Will the hon. Minister inform the House the time frame within which a new investor will be found because we have been waiting and employees are suffering?
Mr M. B. Mwale: Mr Speaker, first of all, allow me to correct the wrong impression created by the hon. Member for Chipili. The ZCCM-IH was not given the mandate to operate the mine, but to find an equity partner. To this effect, I would like to put it on record that it has made a lot of progress in finding an equity partner. At the moment, I would like to say that the Zambia Development Agency, as I have indicated in my statement, is negotiating with the possible equity partner to resume the operations of Maamba Collieries Limited. May I also correct the hon. Member that ZCCM-IH only took over the operations in 2007 and not 2000 as he put it.
I thank you, Sir.
Mr Kambwili (Roan): Mr Speaker, the hon. Minister, in his statement, stated that the ministry has spent about US $500,000 on the rehabilitation of the screening plant. I am aware that the two companies that undertook the job, Poweflex and AB Award (1973) Limited, which belongs to Hon. Mutati, have not been paid. Where has the US $500,000 gone to?
Mr M. B. Mwale: Mr Speaker, according to the information we have at the ministry, the contractors were paid. An amount of US $583,547 for the coal washing plant repairs and maintenance was paid out.
I thank you, Sir.
Mr Mwiimbu (Monze Central): Mr Speaker, arising from the ministerial statement made by the hon. Minister pertaining to the negotiations over the ownership of Maamba Collieries Limited, why did the Government decide to terminate the negotiations with the previous preferred bidder whom it considered not to be politically correct, but had the resources?
Mr M. B. Mwale: Mr Speaker, the hon. Member has not stated who that preferred bidder was and so I am unable to comment on it.
I thank you, Sir.
Mr Kakoma (Zambezi West): Mr Speaker, the hon. Minister stated that the Government wanted a contract miner who could mobilise resources, including equipment. In his statement, it appears that the ZCCM-IH has provided the resources. May I know what the contract miner provided to Maamba Collieries Limited in terms of finances and equipment.
Mr M. B. Mwale: Mr Speaker, my statement was very clear. The contract miner had supplied the equipment. I read out the list of where the other expenditure was utilised. The equipment which was on site was for the contract miner.
I thank you, Sir.
Mr Zulu (Bwana Mkubwa): Mr Speaker, Maamba Collieries is only selling six tonnes against 30 tonnes per month to break even because they owe different companies over K60 billion. How is the Government going to pay this K60 billion so that Maamba Collieries Limited can start operating profitably?
Mr M. B. Mwale: Mr Speaker, one of the considerations of finding an equity partner is that out of the proceeds, we will be able to liquidate the liabilities and even keep some change which will go to the treasury.
I thank you, Sir.
Dr Scott (Lusaka Central): Mr Speaker, the Zimbabweans, for instance, would never allow a situation in which their own productive capacity is unutilised because importers were bringing products from outside. How do we, in Zambia, allow free trade to undermine and destroy our productive capacity and create unemployment?
Mr M. B. Mwale: Mr Speaker, I am not surprised to hear that comment from the hon. Member because in this modern age, considering that he belongs to that age…
Hon. Opposition Members: Ah!
Mr M. B. Mwale: … there is what we call switch-off areas. May I put it very clearly, now, that there is what we call creative destruction. If you would like to belong to the age where we used to protect our own industries, we will not go anywhere. As it is now, even Russia and China, which believed in a communist economy, have moved away from that.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr Speaker: Order!
Mr Mukanga (Kantanshi): Mr Speaker, looking at the Maamba Collieries Limited financial statement, it is easy for the company to return to profitability and productivity. Would the hon. Minister confirm that there is no political will whatsoever by the MMD Government and that is why we have this problem?
Hon. Opposition Members: Hear, hear!
Mr Speaker: Order!
Mr M. B. Mwale: Mr Speaker, I would like to thank the hon. Member for Kantanshi for his follow-up question. I would like to confirm that the mandate of the MMD Government is to look after the welfare of the people and create jobs. In this regard…
Interruptions
Mr M. B. Mwale: … we have demonstrated that ability…
Hon. Opposition Members: Question!
Mr M. B. Mwale: … and even the hon. Members that are saying ‘question’, realise that Luanshya Copper Mines Limited is operating just as Mufulira and Nkana mines have not been closed.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr Speaker: Order!
Mr Msichili (Kabushi): Mr Speaker, there is so much deforestation in this country. Has the Government any intention to ensure that we start using coal as a domestic fuel?
Hon. Government Members interjected.
Mr Speaker: Order!
You are Members of the Executive. How can you interrupt a statement of this magnitude like that?
Mr M. B. Mwale: Mr Speaker, I would like to inform the House that there was even an attempt during the First Republic to start making coal bricks from Maamba Washing Plant so that our people could use them to build their homes. However, I will take it up to see how far we can go. However, the programme has been on going and it has received very poor response from the public.
Thank you, Sir.
Mr Hachipuka (Mbabala): Mr Speaker, does the hon. Minister not think that the situation at Maamba merits the setting up of a commission to further investigate the operations so that a lasting solution is found before the mine sinks?
Hon. Opposition Members: Hear, hear!
Mr M. B. Mwale: Mr Speaker, I have stated that the Government has engaged the ZDA which is negotiating with an equity partner and when that is finalised, we will see to it that Maamba Mine gets back to life. Additionally, the equity partner will have to set up a thermal power plant which will be a ready market for the coal produced at Maamba.
I thank you, Mr Speaker.
Ms Mwape (Mufulira): Mr Speaker, I am made to understand that there will be no direct or indirect protection given to the industries in Zambia. Direct protectionism is where an industry is protected against competition while indirect protectionism is given in form of subsidies where an industry cannot be protected, but needs to be exposed to competition. Is the hon. Minister saying that this Government will not give any form of protection to its local industries, direct or indirect? Going by his answers, is it the Government’s policy that there will be no protection for local industries in any form because China and other countries are not protecting their industries? Is he telling this House and the nation at large that our industries in Zambia will not be protected at all because it is the in thing?
Mr M. B. Mwale: Mr Speaker, I would like to state that the trend in the world is for common markets and free trade areas. Zambia is part of the Global Village. We cannot live in isolation. The desire of this Government is to see that it promotes efficiency and productivity in these industries as opposed to reliance on the Government.
I thank you, Sir.
Mr Shakafuswa (Katuba): Mr Speaker, if the world is moving towards a free market system, why is it that the European markets are giving quotas to developing countries like those in Africa to enter their markets if their trade is free?
Hon. Opposition Members: Hear, hear!
Mr M. B. Mwale: Mr Speaker, the hon. Member should be fully aware that there are regional groupings. If you do not belong to the European Union (EU), you will be given a quota. This is why we are talking about the Common Market for Eastern and Southern Africa (COMESA) and anybody who would want to export into COMESA will be given a quota. Those who belong to the grouping will trade freely. That is the policy of free trade areas as opposed to trading anyhow.
I thank you, Mr Speaker.
Hon. Government Members: Hear, hear!
Mr Magande (Chilanga): Mr Speaker, can the hon. Minister confirm that the ZCCM-IH is a shareholder in Maamba and in most of the mining operations on the Copperbelt? Any shareholder would like to make sure that all his operations are profitable by influencing decisions, for example, of the mine companies on where to buy the coal instead of letting them bring expensive coal in the country and leave the coal at Maamba.
Mr M. B. Mwale: Mr Speaker, I would like to confirm that the ZCCM-IH is a shareholder in Maamba Collieries and also in the mines. However, if the hon. Member for Chilanga was following my statement, I stated that the new smelting technologies on the Copperbelt do not require the usage of coal. I have alluded to the issue of the closed Nkana Smelter which was a big market for Maamba coal. This is why there has been a reduction in the consumption of coal in our mines.
I thank you, Mr Speaker,
Mr Mushili (Ndola Central): Mr Speaker, with the diminishing of the market size in Zambia, is coal mining still viable for the Government and management of Maamba to continue funding?
Mr M. B. Mwale: Mr Speaker, this is why, instead of being a domestic company, you have to think of becoming a multi-national company. I have alluded to Maamba Mine finding international markets in the Democratic Republic of Congo and Malawi. Not only that, we have power shortages in the country. Therefore, the issue of setting up a thermal power plant at Maamba is more than welcome.
I thank you, Mr Speaker.
Dr Machungwa (Luapula): Mr Speaker, the hon. Minister has made it clear that there are a number of orders that are outstanding which can be fulfilled by the company to return to profitability. What is the hon. Minister, together with the management, doing to get the workers to understand that they should produce to meet those orders and return the company to profitability?
Mr M. B. Mwale: Mr Speaker, it is that kind of thinking that is required in our politics so that we, as a country, can move ahead.
Hon. Government Members: Hear, hear!
Mr M. B. Mwale: I would like to appeal, particularly, to the hon. Member of Parliament for Sinazongwe that he has to impress upon the employees to return to work rather than portraying an image that these employees were not being paid anything when, in actual fact, they were being paid something across the board. Last month, they were paid 70 per cent of their salaries as opposed to the impression created in this House that the employees were not paid anything.
I thank you, Mr Speaker.
Mr Muyanda: On a point of order, Sir.
Mr Speaker: You cannot raise a point of order because you raised a point of order in the first place. That is why we have the minister’s statement. How can you raise another point of order on your own previous point of order?
Laughter
Mr Nkombo (Mazabuka Central): Mr Speaker, in his statement, the hon. Minister indicated that they are seeking strategic partners to help with the resuscitation of Maamba Collieries. I am aware that in line with the citizenship economic empowerment and affirmative action, a consortium of indigenous Zambians calling itself “Maamba Katuya” put in a bid to buy shares in Maamba Collieries. Can the hon. Minister indicate what was fundamentally wrong with this bid?
Mr M. B. Mwale: Mr Speaker, I would like to state that the Government re-advertised for bidders and Maamba Katuya was not amongst those that bade.
I thank you, Mr Speaker.
Mr L. J. Mulenga (Kwacha): Mr Speaker, it is clear that the net worth of the company is in the negative. Assuming an equity partner is found, I would like to find out what level of investment would be required and what level of productivity should be achieved in order to turn the company around to profitability. I would also like to know how long it would take to achieve this.
Mr M. B. Mwale: Mr Speaker, the bid price of the company that ZCCM-IH is negotiating with will liquidate all the liabilities and, as I stated, we will even have some change for the Government Treasury.
I thank you, Sir.
Mr Speaker: I am waiting. Any further supplementary question?
Laughter
Hon. Government Members: Boma!
Laughter
Mr Speaker: None!
Laughter
from < http://www.parliament.gov.zm/index.php? ... mitstart=1 >
DAILY PARLIAMENTARY DEBATES FOR THE FOURTH SESSION OF THE TENTH ASSEMBLY - Friday, 2nd October, 2009
MINISTERIAL STATEMENT
STATUS OF MAAMBA COAL MINE OPERATIONS
The Minister of Mines and Minerals Development (Mr M. B. Mwale): Mr Speaker, I thank you for the opportunity to address the House on the status of Maamba Coal Mine operations following a point of order raised by the hon. Member of Parliament for Sinazongwe, Hon. Raphael Muyanda, on Tuesday 29th September, 2009 over the withdrawal of labour at Maamba Mine. I would also like to take advantage of this opportunity to correct the wrong impression created by the hon. Member of Parliament for Sinazongwe that US $5 million meant for resuscitation of operations at Maamba Mine had disappeared as reported in The Sunday Post newspaper of 27th September, 2009.
Sir, in order for me to logically inform the House, I wish to give a brief background of Maamba Collieries Limited (MCL). This company has been in existence as a mining entity for over forty years. Before the take-over by Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) Plc, the mine had produced approximately 15.2 million tonnes of Run of Mine (ROM) coal.
Mr Speaker, from inception, in 1969, up to 1991, MCL operated a profitable mine venture. However, from 1991 to date the mine has faced enormous financial and operational problems that have significantly affected its profitability and its going concern status. Since 1991, the mining operations have been on and off and with insignificant production output and high cost structure. This prompted the Government to sale 100 per cent shares to ZCCM-IH Plc in 2007 with a view to resuscitating the operations at Maamba.
Mr Speaker, it must be noted that the major consumers of Maamba coal had been traditionally the copper smelters on the Copperbelt and Chilanga Cement Company now Lafarge Cement Zambia Plc. You will note that the start of problems at Maamba coincided with the operational difficulties of the Zambia copper mining industry in the period prior to privatisation. It was during this period that ZCCM was operating unprofitably owing to the low copper prices on the international market, high production costs, liquidity problems requiring frequent bail-out from the Government, lack of recapitalisation and subsequent fall in our copper production.
Sir, Maamba Mine was not producing significant coal to cover its operating cost, including the payment of staff salaries prior to the Government’s decision to sale the mine to ZCCM-IH Plc in order for it to recapitalise the mine and make it a profitable mining venture once again. To resume sustainable and profitable mining operations at Maamba, ZCCM-IH Plc and MCL management considered two options:
(a) procuring new mining equipment to replace the old and obsolete equipment in order to facilitate improved mining operations by MCL; or
(b) engaging a contract miner who would bring in all the required mining equipment as an interim measure before finding an equity strategic partner to develop the mine
Mr Speaker, the preferred option by management was to engage a mining contractor. In the initial bid for contract mining, Keren Mining Limited was picked as the mining contractor. However, because Keren Mining Limited failed to mobilise the required mining equipment and commence the operations as per contractual agreement, the contract was terminated in December, 2008. Replacing Keren Mining Limited, Scirocco Enterprises Limited was selected among the other three bidders. Scirocco Enterprises Limited started mining operations in January, 2009. In the period during which ZCCM-IH Plc was sourcing for a contract miner, a loan of US $5.3 million was provided by ZCCM-IH Plc to Maamba Mine management to facilitate the resumption of operations. The Maamba Mine Board of Directors in March, 2008 approved the operation business plan that required the refinancing of mining operations at US $7,336,254. However, ZCCM-IH Plc was only able to secure US$5.3 million which was utilised towards the stated objective.
Mr Speaker, the loan provided by ZCCM-IH Plc to Maamba mine management was utilised as follows:
Use Amount (US$)
Mobilisation fee to contractor 500,000
Fuels for operations 71,883
Salaries and wages from August, 2008 to April, 2009 1,872,000
Coal washing plant repairs and maintenance 583,547
Ropeway repairs 148,974
Weighbridge procurement 72,067
Pit electrification 26,138
Protective clothing 66,331
Vehicles for operations 627,247
Laboratory equipment 66,220
Electricity from August, 2008 to April, 2009 274,929
Operating expenses from August, 2008 to April, 2009 663,016
Total 5,300,000
Coal production started in the last week of April, 2009 and continued uninterrupted for three months leading to Run of Mine coal production total of 88,955 metric tonnes coal. During this period, overburden removal continued which included excavation of soft overburden, hard overburden and re-handling of previous operation in-pit dumped material.
Maamba coal mine has currently, on site, 40,000 tonnes of washed coal equivalent, in value, to K16 billion ready for marketing and 8,000 tonnes raw coal equivalent, in value, to K2 billion at the washing plant stock pile.
Mr Speaker, from the foregoing, it is clear that US $5.3 million was used to recommence coal mine operations at Maamba, as opposed to the allegations made by the hon. Member for Sinazongwe. You may wish to know that the hon. Member for Sinazongwe was fully briefed on the US $5.3 million expenditure before he even raised that allegation in the House.
Mr Speaker, currently, Maamba Collieries Limited has 446 permanent employees and 105 on contract. This constitutes 551 employees directly engaged with coal mine operations which is termed as core business. The other seventy-five permanent employees and forty-five on contract constitute 120 employees engaged in the running of the private school, Izuma Lodge, training centre and township services.
Prior to 2009, Maamba Collieries Limited has relied on borrowed funds from the ZCCM-IH for staff salaries. It was envisaged that with the resumption of operations, Maamba Mine would manage to meet its own obligations. In this initial production phase, Maamba Collieries Limited has experienced difficulties in marketing the coal produced from its operations in time, giving rise to severe financial constraints leading to Maamba Collieries Limited’s failure to meet staff salaries and payment to the contract miner. Maamba Collieries Limited lost its traditional local market due to its unreliable coal production which led its customers to source for coal from outside coal producers.
Mr Speaker, it should be noted that Maamba Collieries Limited has stepped up its efforts to market its coal to raise revenue in order to quickly resolve the issue of salary arrears as well as normalise operations. To this effect, management has signed coal sales contracts with Lafarge for 10,000 metric tonnes worth K10 billion for delivery up to December, 2009 and Zambezi Portland Cement for 4,000 metric tonnes per month worth K1.2 billion every month among other orders. Maamba Management has also clinched orders from the Democratic Republic of Congo of about 4,000 metric tonnes worth K1.2 billion and Malawi for 3,000 metric tonnes worth K900 million. Apart from marketing the coal which is on site, Maamba Collieries Limited is actively looking for other forms of finance in the interim and is committed to paying the salary arrears as soon as possible.
Mr Speaker, it should be pointed out that during the period June to September, 2009, Maamba Coal Mine has, at least, managed, from its constrained cash flow, to pay salary advances to its employees. The advances that have been paid were applied uniformly to all employees including senior managers. The House may wish to know on 25th September, 2009, the employees were paid at a rate of 70 per cent of their September salaries. Unfortunately, employees decided to withdraw labour on 29th September, 2009.
Mr Speaker, currently, the Maamba Collieries Management is negotiating with the employees to resume work as management and the union are working at addressing the issue of paying the salary arrears.
Mr Speaker, as alluded to earlier, the major consumers of coal were the smelters on the Copperbelt. However, with the change in smelting technologies, the smelters on the Copperbelt are not consuming huge quantities of coal as before. For example, the Nkana Smelter which used to consume huge quantities of coal for its smelting operations is on care and maintenance, having been replaced by a more modern plant at Nchanga which does not use coal. Therefore, ZCCM-IH plc has been vigorously looking for a strategic equity partner for the development of Maamba Mine and a thermal power plant at Maamba to create a ready market for Maamba Coal. The Zambia Development Agency (ZDA) Negotiating Team, in line with the ZDA Act, is carrying out negotiations with the preferred bidders to partner with ZCCM-IH plc in the development of Maamba Mine and thermal power plant. The negotiations have reached an advanced stage and, once concluded, will be submitted to the Committee of Ministers prior to presentation to Cabinet and before any announcement of the results of these negotiations can be made public.
I thank you, Sir.
Mr Speaker: Hon. Members are now free to ask questions on points of clarification on the statement which has been made by the hon. Minister of Mines and Minerals Development.
Mr Muyanda (Sinazongwe): Mr Speaker, I would like to know why the Government has failed to privatise Maamba Collieries from 1991 when other mines were privatised and when will you precisely pay the workers of Maamba Collieries the arrears that they have accumulated arising from the inefficiency of the prevailing management?
Mr M. B. Mwale: Mr Speaker, I am a bit surprised that the hon. Member for Sinazongwe does not seem to have followed my statement which is very clear on the matter. It is not due to the inefficiency of Maamba Mine Management, but that we lost the local market which is our traditional market for coal. As outlined in my statement, Maamba Collieries has made headways in finding a market for the coal. In the interim, as clearly put in my statement, management contacted a contract miner who could mine the coal and keep our people in employment rather than out of employment.
I thank you, Sir.
Mr Simuusa (Nchanga): Mr Speaker, US $5 million is a lot of money. As we are talking now, workers have not been paid for four months and as for the coal on the ground, one of the customers, the largest customers, has refused to get it because it is poor grade and the contractor who was on site, as of yesterday, has pulled his equipment out of Maamba Collieries. Would the hon. Minister tell me what the way forward is in the short term because we are sitting on a time bomb?
Mr M. B. Mwale: Mr Speaker, I would like to state that it is statements like that, coming from the hon. Member for Nchanga, which cause problems in our country. There is no time bomb and if you followed the statement which has been issued in this House, I stated that management of Maamba Collieries is doing everything possible to source funds.
I have clearly stated in my statement that management is doing everything to ensure that the employees are paid their salary arrears. May I restate that the employees were being paid salary advances and, as of September, 2009, they were paid 70 per cent of their salaries, which is not the same as not being paid anything.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr D. Mwila (Chipili): Mr Speaker, the Zambia Consolidated Copper Mines Investments Holdings (ZCCM-IH) has failed to run Maamba Collieries Limited and that is the reason it wants to bring in a new investor. From 2000…
Mr Speaker: Order! Can you ask your question, please?
You may continue.
Mr D. Mwila: It is now nine years down the line and the ZCCM-IH has failed to find a new investor.
Mr Speaker: Order! What is your question?
You may continue.
Mr D. Mwila: Will the hon. Minister inform the House the time frame within which a new investor will be found because we have been waiting and employees are suffering?
Mr M. B. Mwale: Mr Speaker, first of all, allow me to correct the wrong impression created by the hon. Member for Chipili. The ZCCM-IH was not given the mandate to operate the mine, but to find an equity partner. To this effect, I would like to put it on record that it has made a lot of progress in finding an equity partner. At the moment, I would like to say that the Zambia Development Agency, as I have indicated in my statement, is negotiating with the possible equity partner to resume the operations of Maamba Collieries Limited. May I also correct the hon. Member that ZCCM-IH only took over the operations in 2007 and not 2000 as he put it.
I thank you, Sir.
Mr Kambwili (Roan): Mr Speaker, the hon. Minister, in his statement, stated that the ministry has spent about US $500,000 on the rehabilitation of the screening plant. I am aware that the two companies that undertook the job, Poweflex and AB Award (1973) Limited, which belongs to Hon. Mutati, have not been paid. Where has the US $500,000 gone to?
Mr M. B. Mwale: Mr Speaker, according to the information we have at the ministry, the contractors were paid. An amount of US $583,547 for the coal washing plant repairs and maintenance was paid out.
I thank you, Sir.
Mr Mwiimbu (Monze Central): Mr Speaker, arising from the ministerial statement made by the hon. Minister pertaining to the negotiations over the ownership of Maamba Collieries Limited, why did the Government decide to terminate the negotiations with the previous preferred bidder whom it considered not to be politically correct, but had the resources?
Mr M. B. Mwale: Mr Speaker, the hon. Member has not stated who that preferred bidder was and so I am unable to comment on it.
I thank you, Sir.
Mr Kakoma (Zambezi West): Mr Speaker, the hon. Minister stated that the Government wanted a contract miner who could mobilise resources, including equipment. In his statement, it appears that the ZCCM-IH has provided the resources. May I know what the contract miner provided to Maamba Collieries Limited in terms of finances and equipment.
Mr M. B. Mwale: Mr Speaker, my statement was very clear. The contract miner had supplied the equipment. I read out the list of where the other expenditure was utilised. The equipment which was on site was for the contract miner.
I thank you, Sir.
Mr Zulu (Bwana Mkubwa): Mr Speaker, Maamba Collieries is only selling six tonnes against 30 tonnes per month to break even because they owe different companies over K60 billion. How is the Government going to pay this K60 billion so that Maamba Collieries Limited can start operating profitably?
Mr M. B. Mwale: Mr Speaker, one of the considerations of finding an equity partner is that out of the proceeds, we will be able to liquidate the liabilities and even keep some change which will go to the treasury.
I thank you, Sir.
Dr Scott (Lusaka Central): Mr Speaker, the Zimbabweans, for instance, would never allow a situation in which their own productive capacity is unutilised because importers were bringing products from outside. How do we, in Zambia, allow free trade to undermine and destroy our productive capacity and create unemployment?
Mr M. B. Mwale: Mr Speaker, I am not surprised to hear that comment from the hon. Member because in this modern age, considering that he belongs to that age…
Hon. Opposition Members: Ah!
Mr M. B. Mwale: … there is what we call switch-off areas. May I put it very clearly, now, that there is what we call creative destruction. If you would like to belong to the age where we used to protect our own industries, we will not go anywhere. As it is now, even Russia and China, which believed in a communist economy, have moved away from that.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr Speaker: Order!
Mr Mukanga (Kantanshi): Mr Speaker, looking at the Maamba Collieries Limited financial statement, it is easy for the company to return to profitability and productivity. Would the hon. Minister confirm that there is no political will whatsoever by the MMD Government and that is why we have this problem?
Hon. Opposition Members: Hear, hear!
Mr Speaker: Order!
Mr M. B. Mwale: Mr Speaker, I would like to thank the hon. Member for Kantanshi for his follow-up question. I would like to confirm that the mandate of the MMD Government is to look after the welfare of the people and create jobs. In this regard…
Interruptions
Mr M. B. Mwale: … we have demonstrated that ability…
Hon. Opposition Members: Question!
Mr M. B. Mwale: … and even the hon. Members that are saying ‘question’, realise that Luanshya Copper Mines Limited is operating just as Mufulira and Nkana mines have not been closed.
I thank you, Sir.
Hon. Government Members: Hear, hear!
Mr Speaker: Order!
Mr Msichili (Kabushi): Mr Speaker, there is so much deforestation in this country. Has the Government any intention to ensure that we start using coal as a domestic fuel?
Hon. Government Members interjected.
Mr Speaker: Order!
You are Members of the Executive. How can you interrupt a statement of this magnitude like that?
Mr M. B. Mwale: Mr Speaker, I would like to inform the House that there was even an attempt during the First Republic to start making coal bricks from Maamba Washing Plant so that our people could use them to build their homes. However, I will take it up to see how far we can go. However, the programme has been on going and it has received very poor response from the public.
Thank you, Sir.
Mr Hachipuka (Mbabala): Mr Speaker, does the hon. Minister not think that the situation at Maamba merits the setting up of a commission to further investigate the operations so that a lasting solution is found before the mine sinks?
Hon. Opposition Members: Hear, hear!
Mr M. B. Mwale: Mr Speaker, I have stated that the Government has engaged the ZDA which is negotiating with an equity partner and when that is finalised, we will see to it that Maamba Mine gets back to life. Additionally, the equity partner will have to set up a thermal power plant which will be a ready market for the coal produced at Maamba.
I thank you, Mr Speaker.
Ms Mwape (Mufulira): Mr Speaker, I am made to understand that there will be no direct or indirect protection given to the industries in Zambia. Direct protectionism is where an industry is protected against competition while indirect protectionism is given in form of subsidies where an industry cannot be protected, but needs to be exposed to competition. Is the hon. Minister saying that this Government will not give any form of protection to its local industries, direct or indirect? Going by his answers, is it the Government’s policy that there will be no protection for local industries in any form because China and other countries are not protecting their industries? Is he telling this House and the nation at large that our industries in Zambia will not be protected at all because it is the in thing?
Mr M. B. Mwale: Mr Speaker, I would like to state that the trend in the world is for common markets and free trade areas. Zambia is part of the Global Village. We cannot live in isolation. The desire of this Government is to see that it promotes efficiency and productivity in these industries as opposed to reliance on the Government.
I thank you, Sir.
Mr Shakafuswa (Katuba): Mr Speaker, if the world is moving towards a free market system, why is it that the European markets are giving quotas to developing countries like those in Africa to enter their markets if their trade is free?
Hon. Opposition Members: Hear, hear!
Mr M. B. Mwale: Mr Speaker, the hon. Member should be fully aware that there are regional groupings. If you do not belong to the European Union (EU), you will be given a quota. This is why we are talking about the Common Market for Eastern and Southern Africa (COMESA) and anybody who would want to export into COMESA will be given a quota. Those who belong to the grouping will trade freely. That is the policy of free trade areas as opposed to trading anyhow.
I thank you, Mr Speaker.
Hon. Government Members: Hear, hear!
Mr Magande (Chilanga): Mr Speaker, can the hon. Minister confirm that the ZCCM-IH is a shareholder in Maamba and in most of the mining operations on the Copperbelt? Any shareholder would like to make sure that all his operations are profitable by influencing decisions, for example, of the mine companies on where to buy the coal instead of letting them bring expensive coal in the country and leave the coal at Maamba.
Mr M. B. Mwale: Mr Speaker, I would like to confirm that the ZCCM-IH is a shareholder in Maamba Collieries and also in the mines. However, if the hon. Member for Chilanga was following my statement, I stated that the new smelting technologies on the Copperbelt do not require the usage of coal. I have alluded to the issue of the closed Nkana Smelter which was a big market for Maamba coal. This is why there has been a reduction in the consumption of coal in our mines.
I thank you, Mr Speaker,
Mr Mushili (Ndola Central): Mr Speaker, with the diminishing of the market size in Zambia, is coal mining still viable for the Government and management of Maamba to continue funding?
Mr M. B. Mwale: Mr Speaker, this is why, instead of being a domestic company, you have to think of becoming a multi-national company. I have alluded to Maamba Mine finding international markets in the Democratic Republic of Congo and Malawi. Not only that, we have power shortages in the country. Therefore, the issue of setting up a thermal power plant at Maamba is more than welcome.
I thank you, Mr Speaker.
Dr Machungwa (Luapula): Mr Speaker, the hon. Minister has made it clear that there are a number of orders that are outstanding which can be fulfilled by the company to return to profitability. What is the hon. Minister, together with the management, doing to get the workers to understand that they should produce to meet those orders and return the company to profitability?
Mr M. B. Mwale: Mr Speaker, it is that kind of thinking that is required in our politics so that we, as a country, can move ahead.
Hon. Government Members: Hear, hear!
Mr M. B. Mwale: I would like to appeal, particularly, to the hon. Member of Parliament for Sinazongwe that he has to impress upon the employees to return to work rather than portraying an image that these employees were not being paid anything when, in actual fact, they were being paid something across the board. Last month, they were paid 70 per cent of their salaries as opposed to the impression created in this House that the employees were not paid anything.
I thank you, Mr Speaker.
Mr Muyanda: On a point of order, Sir.
Mr Speaker: You cannot raise a point of order because you raised a point of order in the first place. That is why we have the minister’s statement. How can you raise another point of order on your own previous point of order?
Laughter
Mr Nkombo (Mazabuka Central): Mr Speaker, in his statement, the hon. Minister indicated that they are seeking strategic partners to help with the resuscitation of Maamba Collieries. I am aware that in line with the citizenship economic empowerment and affirmative action, a consortium of indigenous Zambians calling itself “Maamba Katuya” put in a bid to buy shares in Maamba Collieries. Can the hon. Minister indicate what was fundamentally wrong with this bid?
Mr M. B. Mwale: Mr Speaker, I would like to state that the Government re-advertised for bidders and Maamba Katuya was not amongst those that bade.
I thank you, Mr Speaker.
Mr L. J. Mulenga (Kwacha): Mr Speaker, it is clear that the net worth of the company is in the negative. Assuming an equity partner is found, I would like to find out what level of investment would be required and what level of productivity should be achieved in order to turn the company around to profitability. I would also like to know how long it would take to achieve this.
Mr M. B. Mwale: Mr Speaker, the bid price of the company that ZCCM-IH is negotiating with will liquidate all the liabilities and, as I stated, we will even have some change for the Government Treasury.
I thank you, Sir.
Mr Speaker: I am waiting. Any further supplementary question?
Laughter
Hon. Government Members: Boma!
Laughter
Mr Speaker: None!
Laughter
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