We are pleased to inform you that Unit 1 (150MW) of Maamba Collieries Coal Fired Power Plant (CFPP) was synchronized with the national grid yesterday, Sunday, 24 July 2016 at 12.57 hrs successfully.
Prior to this, Turbine 1 was rolled at 16.45 hrs on 23 July 2016 and the generator open circuit/short circuit/excitation system tests etc were conducted during the night on this day and 24 July in the morning.
ZCCM-IH owns 35% of Maamba Collieries Limited.
An impressive array of investors and lenders has enabled Maamba Collieries to launch and implement an ambitious power project that makes use of low-grade coal.
Maamba Collieries was incorporated in 1971 under the ownership of the Zambian Government, and has since become the largest coal mining company in the country, boasting an opencast coal mine situated near the village of Maamba in the Sinazongwe district of Zambia. The original mine was operational for many years, but low-grade coal was left to stockpile as waste. This resulted in severe environmental pollution and health hazards, both water and airborne, due to spontaneous combustion and acid mine drainage.
As Zambia is a country with growing energy needs – and, indeed, a lack of energy in many areas – the government devised a strategy: in order to mitigate the environmental risks and to enable Maamba Collieries to effectively exploit its resources, the government decided to establish a thermal power plant that could make use of low-grade coal. Consequently, this project was able to kill two birds with one stone, by cleaning up the environmental mess left by the stockpiles of coal while providing much-needed energy to the country.
The project is the first of its kind in Zambia, as it provides a dependable and sustainable base-load power source, which is crucial to the country’s energy security. It also provides Maamba Collieries with infrastructure that is ready to scale-up in line with the growing demand for power, not only in Zambia, but also in the entire sub-Saharan region.
There are two key elements to the project: the first is a coalmine revival programme, which includes the establishment of a coal handling and processing plant. The second and most important feature is the setting up of a 300MW mine mouth (composed of two 150MW sites) coal-fired power plant, along with a 48km, 330kV double circuit transmission line and raw water pump house with a 21km-long pipeline.
Safeguarding the project
The Maamba Collieries project is being implemented by Maamba Collieries Limited (MCL). A project of this size, scale and significance of course requires a huge capital investment, and so the Zambian Government decided to bring in a strategic partner with the necessary technical experience, financial strength and track record to ensure its successful completion. Following a global bidding process in 2010, Nava Bharat (Singapore) (NBS) was selected. NBS acquired a 65 percent shareholding in MCL, while ZCCM Investment Holdings held the remaining 35 percent.
The Maamba Collieries project would bridge the current power shortfall, especially at a time when the lack of reliable power is hampering the region’s development.
NBS is a wholly owned subsidiary of Nava Bharat Ventures, an Indian-listed business conglomerate, while ZCCM is a company mainly owned by the Government of Zambia. It is a unique and collaborative project in Africa, wherein the sponsors are from Singapore, India and Zambia, the principal contractors are from China, and lenders come from across the globe.
To guarantee the completion of the project, MCL signed an engineering, procurement and construction contract with SEPCO – one of the largest thermal power construction groups in China – to bring much-needed expertise to the project. MCL has also employed circulating fluidised bed combustion technology for the power project, which is known and recognised as an environmentally friendly technique with the additional ability to use thermal-grade fuels of diverse origins and qualities.
To ensure a long-term customer base, MCL has secured long-term purchase agreements: the firm has signed a 20-year power purchase agreement (PPA) on a ‘take or pay’ basis with ZESCO, the local state-owned utility. The tariff payable to MCL is denominated in US dollars and is subject to indexation based on US producer prices. As a security mechanism over PPA receivables, MCL has also entered into an escrow agreement with ZESCO, which regulates the flow of revenues received under the PPA. The Zambian Government has also provided a guarantee that will remain in place until the escrow account mechanism is operational to the satisfaction of MCL and its lenders.
The Government of Zambia has acted as a strong supporter of the Maamba Collieries project, as it is strategically important for the Zambian economy, providing a reliable energy supply for the country. MCL has therefore entered into an implementation agreement with the government to support the obligations of ZESCO, covering standard clauses on compensation in case of a change in the law, political force majeure or government default. It also provides customary buyout rights and termination compensation, designed to cover senior debt and equity. MCL has also signed an investment promotion and protection agreement with the government, wherein it is entitled to specific rights, such as: employing local and expatriate employees; security interest over project assets to the lenders of the project; designated tax and duty exemptions; and assistance in obtaining permits, including the licenses and consents required for implementation of the project.
Financial aspects
The power plant’s capital expenditure is estimated at $738m, and the coalmine’s capital expenditure – including mine establishment expenditure – is estimated at $105m, creating a total capital expenditure of $843m. The project achieved financial closure in July last year, making it the first independent power project of this size in entire sub-Saharan region to achieve this status. However, before financial closure itself, sponsors committed their entire equity, and construction was 80 percent completed.
The project is being funded on a debt-equity ratio of 70:30. Sponsors have contributed equity of $253m, while debt totalling $590m has been raised from a consortium of lenders comprising large international commercial banks and development financial institutions on a limited recourse project finance basis.
These banks include the Industrial and Commercial Bank of China, Bank of China, Standard Chartered Bank and Absa Bank, which have been secured on the basis of the insurance cover of Sinosure, the export credit agency of China. This is the first private power project in the sub-Saharan region to receive export credit agency insurance cover from Sinosure. Furthermore, the domestic bank Barclays Bank Zambia is also contributing, along with a number of developmental financial institutions, including Development Bank of Southern Africa, Industrial Development Corporation of South Africa and Africa Finance Corporation.
Future challenges
Zambia’s reliance on hydropower to meet current and future electricity demand faces significant challenges, such as: increased economic development leading to growing demand for other water uses; increased water needs to address conservation goals in light of the potential impact of climate variability on water supply; and increased power demands requiring additional water for hydropower. With Maamba Collieries being the only thermal power plant of its size in the country, the project diversifies Zambia’s energy sources from 96 percent hydropower and offers reliable base-load power.
Due to drought conditions, hydro projects in Zambia are underutilised, resulting in the country facing a power deficit of 760MW as of April this year, which constitutes about 40 percent of total demand. There are power cuts in the country for between eight and 12 hours per day. The imminent completion of the Maamba Collieries project would bridge the current shortfall, especially at a time when the lack of reliable power is hampering the region’s development, making the project of significant strategic importance to Zambia.
The project will also help Zambia grow on a socioeconomic level, in terms of health, education and vocational training, in addition to supporting the industries upon which the country’s economy relies – most notably, mining and agriculture. Presently, these industries are operating at very low capacities due to the country’s frequent power cuts.
Now in an advanced stage of completion and scheduled for commissioning in July this year, the project offers hope to other African nations that large-scale projects can take off without real movement of precious raw materials such as coal and minerals. Overall, the project has resulted in significant economic empowerment and growth in the under-developed Southern Province of Zambia.
To empower farmers with a diversified source of income in Chililabombwe, Lubambe Copper Mine has constructed a fish farm with a capacity to stock up 3,000 fingerlings bream, representing a market value of K60.000.
Bream is one of Zambia’s most sought-after fish and is a money-spinner.
Lubambe’s corporate social responsibility manager Joel Bwalya said the mining company partnered with a local farming co-operative in Kasapa village to build the fish farm near Kebumba stream.
According to a latest newsletter on mining in Zambia, an initiative by the Zambia Chambers of Mines, Mr Bwalya said the implementation has proved to be a success and as such the mine intends to build another fish farm.
He said the enterprise is a good source of revenue for most farmers in the area and far exceeds what they would get by selling maize.
“We reckon that this time, we will be able to seed the fish farm with 4,000 fish, and that means a bigger harvest. The villagers are clearly excited by the potential of fish-farming and its ability to help them diversify,” Mr Bwalya said.
He said the fish farm is a partnership between the mine and farmers.
Mr Bwalya is hopeful that fish-farming of this sort will evolve into a fully-fledged business with huge commercial potential for the entire country.
Commenting on the development, Kasapa village headman Langson Pensulo said the fish farm has helped improve the livelihood of the villagers in the area.
Source: Daily Mail
Mutale Mukuka, Chief Financial Officer at Zambian electricity generation, transmission, distribution and supply company Copperbelt Energy, talks to African Review about power tariffs, working in a highly politicalised business environment, and the role of regulations on investment opportunities.
Gamsberg, which is in the Northern Cape, holds one of the world’s largest undeveloped zinc sulphide deposits, with approximately 160 Mt of defined ore resources.
For a natural resources company like Vedanta, South Africa offers a unique opportunity with its wealth of diverse natural resources, Agarwal said. The London-listed firm mines copper in Zambia at Konkola Copper Mines (KCM) and produces zinc and lead concentrate at Black Mountain Mining (BMM) in South Africa.
Mining conglomerate Vedanta Resources will invest a total Dollars 1 billion (about Rs 6,600 crore) in its Gamsberg mine project in South Africa, which is one of the world’s largest undeveloped zinc deposits.
The head of the Indian natural resources company, with interests in oil and gas, zinc-lead-silver, copper, iron-ore, aluminium and commercial energy, announced that Vedanta would be signing two memorandums of understanding with South African companies as part of the delegation accompanying Modi.
A year ago was not an easy time to be starting a zinc mine but Vedanta’s timing has proved opportune in that zinc, which has been unloved for so long, is back in fashion.
Groundbreaking at Gamsberg signalled the start of the development of a 250 000 t/y opencast zinc mine, concentrator plant and associated infrastructure at the mining town of Aggeneys, 113 km north-east of Springbok, where Vedanta is engaged in a multi-year $782-million Southern African Gamsberg-Skorpion integrated zinc project.
“I believe that this is the largest project going on in Africa also South Africa has a tremendous mining skill and India does not have that, we have taken a lot of mining companies, spent nearly 200 million dollars on these South African companies to take the South African contractors to India to develop our mines – so it is a two-way business”.
The Durban-born Naidoo made that comment in reference to this year’s final shipment of zinc from Vedanta Resources’ Lisheen mine in Ireland – also acquired from Anglo American – which brought to an end the flow of 120 000 t of zinc a year from Ireland’s now-closed Tipperary province mine.
The MoUs are for the development and supply of equipment and transfer of technology, with an aim to improve safety and productivity at the mechanised underground mines of Vedanta’s subsidiary, Hindustan Zinc Ltd (HZL).
Some 125 South Africans work on various HZL sites across India and Vedanta has awarded projects worth nearly $300 million to at least seven companies based in South Africa to date. BMM is the largest private employer in the Bushmanland and Namaqua region, providing employment for 1,300 people. As such, the company has committed to all closure processes reflecting best practice in terms of sustainability and environmental rehabilitation.
Source: Equilibrio informativo
By KENNEDY MUPESENI –
Mining companies should make use of underground water to generate electricity for their own operations, United Nations (UN) country coordinator Janet Rogan has said.
Most of the water the mines pump out of underground is usually channelled to main water bodies like rivers and streams un utilised.
But Ms Rogan said with the low power production, investment in power generation would help them overcome electricity challenges.
“There is a lot of water that is channelled to the natural water bodies and I think mining companies should think of using the water for power generation looking at the power shortages facing the country,” she said.
Ms Rogan was speaking in an interview in Chililabombwe after touring Konkola Copper Mines (KCM) facilities.
She was impressed after touring the water pumping facility and the latest mining equipment the mining company is employing.
“I am impressed by the level of technology KCM is using; this means that Zambia’s mining sector has a bright future,” Ms Rogan said.
She said with copper prices fetching lowly on the international market, it was imperative for mining companies to work on reducing the cost of production.
Ms Rogan, who also toured Lufwanyama emerald area, said Zambia had massive potential for emerald production which she said had remained untapped.
“I did not know that Copperbelt had a lot of potential for gemstones. There is need for investment in the sub sector, probably the gemstone belt could be developed looking at the massive potential Lufwanyama area has,” she said.
Source: Times of Zambia
Nava Bharat Ventures has rallied 13% to Rs 250, also its 52-week high on the BSE, after the company announced that its Zambian subsidiary, Maamba Collieries Limited (MCL) has repaid the sponsor bridge loan to Nava Bharat Group in full.
“The company’s Zambian subsidiary, Maamba Collieries Limited (MCL) has concluded accession of additional long term debt. With this, MCL’s integrated coal and power project is funded, with long term external total debt of USD 590 million,” Nava Bharat Ventures said in a BSE filing.
Total debt including the debt of US$ 515 million for which the financial closure was announced earlier, it added.
Meanwhile, the stock has outperformed the market by surging 51% in past one month, after the company reported more than doubled net profit of Rs 58 crore for the quarter ended March 2016 (Q4FY16) against Rs 24 crore in a year ago quarter. The S&P BSE Sensex was up 0.7% during the same period.
The company attributed better performance during the quarter owing to a combination of positive factors like better margins for power and sugar with better volumes of sale for power and ferro alloys.
At 12:29 AM, the stock was up 10% at Rs 243 on the BSE. A combined 1.57 million shares changed hands on the counter on the NSE and BSE.
Source: Business Standard
By KENNEDY MUPESENI –
KONKOLA Copper Mines (KCM) has reduced the cost of production by 18 per cent while production has increased by seven per cent despite the challenges mining companies are facing.
KCM vice-president for local economic development, David Paterson said to reduce the impact of low copper prices on the international market, the company had worked on the new business strategy which had seen production costs drop by 18 per cent.
“We have developed a new production strategy which has seen production costs dropping by 18 per cent while increasing copper ore production by seven per cent despite the unfavourable business conditions on the international market,” Mr Paterson said.
He was briefing United Nations country coordinator Janet Rogan who toured the mining company’s facilities in Chililabombwe and Chingola on Wednesday.
Mr Paterson said KCM had been working on increasing efficiency by deploying one of the best modern technology equipment which had seen production costs go down.
He said the company wanted to prepare for the future.
“We want to prepare for the future so that when commodity prices start picking, they find us in a much better condition,” Mr Paterson said.
He said since the company took over mining operations in the country, the parent company, Vedanta Resources Plc, had invested to a tune of US$3 billion, a demonstration of the company’s commitment to the future of its mining in the country.
KCM geological services manager Davy Mubita said the sinking of the shaft at Konkola underground mine in Chililabombwe had expanded the lifespan and copper ore production for KCM.
“We recently extended the production capacity of the mine to eight million tonnes of ore after deepening shafts as well as sinking new ones at Konkola underground mine,” Mr Mubita said.
Source: Times of Zambia
Nava Bharat Ventures Ltd’s Zambian subsidiary, Maamba Collieries Limited (MCL) has concluded accession of additional long term debt. With this, MCL’s integrated coal and power project is funded, with long term external total debt of US$ 590 million (including the debt of US$515 million for which the financial closure was announced earlier).
Following the disbursement of loan by the additional lender, MCL has repaid the sponsor bridge loan to Nava Bharat group in full, pursuant to common terms agreement with the lenders.
Shares of NAVA BHARAT VENTURES LTD. was last trading in BSE at Rs.220.85 as compared to the previous close of Rs. 217.25. The total number of shares traded during the day was 49542 in over 1655 trades.
The stock hit an intraday high of Rs. 224.15 and intraday low of 218.75. The net turnover during the day was Rs. 10983874.
Source: Equity Bulls