Lusaka, Zambia – 15 April 2013 – Maamba Collieries Limited “’ the Nava Bharat Singapore Pte Limited unit building Zambia’s first coal-fired power plant in 50 years “’ hopes to complete US$550 million in debt financing by August.
Bloomberg News quotes CFO V. Lakshmi Narayana as saying that the company is in talks with lenders including the African Development Bank, China Development Bank, and Standard Bank Group Limited. Standard Chartered plc and Barclays plc also expressed interest in funding Maamba’s power-plant project, he added.
“We have seen a very high level of interest,” Narayana said in an interview in Maamba, about 240km south-west of the capital, Lusaka. “We received expressions of interest almost for 1.25 times more than we were seeking to raise.”
Maamba is building a 300-megawatt power plant next to the coal mine it owns in Zambia’s Southern Province, near Lake Kariba, to cover an electricity shortage that has led to power cuts in the region. The company also plans to take advantage of coal demand in the country that it says may double over the next year.
The plant will start producing power by October 2014, Narayana said, and the company will probably start building a second phase at the plant in 2015 that will double capacity.
Nava Bharat owns 65% of Maamba, while the Zambian government owns 35% through ZCCM Investments Holdings plc. ABSA Group Limited is advising Maamba on its financing.
The company is also talking to the Development Bank of Southern Africa Limited and the Bank of China, Narayana added. The group of Chinese lenders will probably provide the biggest share of funding, he said.
Zambia has a capacity to produce about 2,000MW of power, almost all generated by hydro plants. The southern African nation has experienced shortages as mining industry growth outpaces the increase in electricity supplies.
While Maamba will depend on selling electricity to state-owned power utility Zesco Limited for most of its profit, the company is also considering exporting coal to the Democratic Republic of Congo by rail, said corporate affairs manager Janardhan Lavu.
The company sells 20,000 to 30,0000tpm of coal to Zambian cement factories, steel plants, copper mines and fertiliser makers. Exports to Congo could match Maamba’s local coal sales, he said.
“There is a substantial market there, mainly in the copper industry,” said Lavu. “Local sales themselves may double by the end of next year as new cement plants start producing,” he added.
Mining companies want to take advantage of Zambia Railways Limited’s plans to spend US$1.5 billion to resuscitate the country’s rail network. Konkola Copper Mines this month sent its first copper in five years by rail from its mines in Chingola to Tanzania.
Source: Bloomberg News. For more information, click here.