Ministry of Finance and National Planning Minister, Dr. Situmbeko Musokotwane says the sale of 65% Shares of Maamba Collieries to Nava Bharat Limited of Singapore, is the beginning of a process to revamp the operations of the mine and ensure its viability.

Dr. Musokotwane said the sale of Maamba Collieries Limited (MCL) at an estimated cost of US$ 93 million and the development of a new 300MW Thermal Power Plant at Maamba estimated to cost about US$ 420 million would redevelop the coal mine, which had been facing serious challenges in attracting finance. This had negatively impacted on its ability to invest in plant and machinery as well as mine development programmes.

The Minister was speaking at the Sale and Purchase Agreement signing ceremony between Government and Nava Bharat Singapore Private Limited Company (NBS) in Lusaka. Nava Bharat is a company incorporated in Singapore with mining and power production operations in India and Indonesia.

He stated that Government through ZCCM Investment Holdings (ZCCM-IH) would retain 35% shares in Maamba to ensure continued development of the coal mine. Nava Bharat would pay ZCCM-IH a cash consideration of US$ 26 million for the 65% shares in Maamba.

Dr. Musokotwane however, noted that because Maamba’s liabilities had been increasing since the start of the privatisation process, the actual cash consideration payable to ZCCM-IH would be determined by the outcome of the Completion Audit due by mid January 2010 that would determine the net worth of MCL.

He further revealed that Government would no longer be directly responsible for the over US$ 50 million liability that Maamba owes to various creditors. “Maamba itself under Nava Bharat management and part ownership with ZCCM-IH will work towards liquidating the indebtness once the company’s cash flows becomes healthy,” he said.

Nava Bharat and ZCCM-IH have committed to invest a sum equivalent to US$ 6 million per annum when Maamba attains the targeted maximum capacity production of 2 million tonnes of washed coal capacity per annum.

Dr. Musokotwane also said Government would in future offer up to 25% shares to the general Zambian public through the Lusaka Stock Exchange once Maamba establishes a track record of profitability and meets the listing criteria. He also stated that the purchase agreement would ensure that existing jobs at Maamba were sustainable whilst retirees had their benefits attended to as the company’s operations improved.

The Minister said the agreement was good as it clearly protected the interests of both Zambians and the investor and congratulated the negotiating teams that arrived at the equitable deal. He said the transaction was in line with Government’s commitment to ensure that the private sector was at the centre stage of economic activities in the country.

Dr Musokotwane said Government’s objective in the privatisation programme was to ensure privately run and viable enterprises were amenable to infusion of new capital investment. He said Government would like to see the private sector playing a more significant role in its social responsibility programmes and urged the new owners of Maamba Collieries to plough back into the community.

And Nava Bharat Chairman, Ashok Devineni noted that despite best efforts put in by MCL at the company level and ZCCM-IH and government as stakeholders, MCL had been a loss making company for several years.

“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,” Mr Ashok said.

He said his firm wanted Zambia to partake in the benefit of value addition for a precious mineral like coal and would explore the possibility of ramping up the power generation beyond 300 MW at MCL after conducting requisite feasibility study.

He applauded the Government and particularly the Zambia Development Agency negotiating team for the professional and transparent manner in the entire process of divestment in MCL, starting with invitation of international bids to the ultimate signing of the Sale and Purchase Agreement.

And ZCCM-IH Chairperson, Alfred Lungu said the installation of a 300MW power plant would help mitigate the current power deficit resulting in load shedding as well as create employment in Maamba.