MINISTERIAL STATEMENTBY

HON. MAXWELL. M. B. MWALE, MP, MINISTER

OF MINES AND MINERALS DEVELOPMENT ON

THE STATUS OF MAAMBA COLLIERIES LIMITED

MR. SPEAKER,

I WISH TO THANK YOU FOR GIVING ME THIS OPPORTUNITY TO

ADDRESS THIS AUGUST HOUSE ON THE CURRENT STATUS OF

MAAMBA COLLIERIES LIMITED (MCL). MY ADDRESS WILL HIGHLIGHT

PROGRESS MADE TOWARDS THE DEVELOPMENT OF PROFITABLE MCL

OPERATIONS.

MR. SPEAKER,

THE HOUSE MAY RECALL THAT IN SEPTEMBER 2009 I GAVE AN

UPDATE ON THE STATUS OF MAAMBA COAL MINE OPERATIONS

FOLLOWING A POINT OF ORDER RAISED BY HONOURABLE RAPHAEL

MUYANDA, MEMBER OF PARLIAMENT FOR SINAZONGWE. IN THAT

STATEMENT, I INFORMED THE HOUSE THAT:

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IN 2007 THE GOVERNMENT DECIDED TO TRANSFER ITS SHARES

TO ZCCM INVESTMENT HOLDINGS IN A BID TO RESUSCITATE

OPERATIONS AT MAAMBA COAL MINE.

TO RESUME SUSTAINABLE AND PROFITABLE MINING

OPERATIONS AT MAAMBA, ZCCM INVESTMENT HOLDINGS AND

MAAMBA COLLIERIES LIMITED ENGAGED A CONTRACT MINER

TO BRING IN THE REQUIRED MINING EQUIPMENT AND RESUME

OPERATIONS AS AN INTERIM MEASURE BEFORE FINDING AN

EQUITY PARTNER. IN THE INITIAL BID FOR CONTRACT MINING,

KEREN MINING LIMITED WAS ENGAGED BUT BECAUSE THEY

FAILED TO MOBILIZE THE REQUIRED MINING EQUIPMENT AND

RESUME MINING AS PER CONTRACTUAL AGREEMENT, THE

CONTRACT WAS TERMINATED. KEREN MINING LIMITED WAS

REPLACED BY SCIROCCO ENTERPRISES LIMITED.

3. WITH THE COMING ON BOARD OF SCIROCCO ENTERPRISES

LIMITED, MINING RESUMED IN APRIL 2009. A TOTAL OF 89,000

METRIC TONNES RUN OF MINE COAL WAS PRODUCED. AT THAT

TIME 40,000 TONNES OF WASHED COAL VALUED AT K16

BILLION AND 8,000 TONNES OF RAW COAL VALUED AT K2

BILLION WAS IN STOCK. IT SHOULD HOWEVER, BE RECALLED

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THAT AT THAT TIME, THE MINE EXPERIENCED DIFFICULTIES IN

MARKETING THE COAL PRODUCED THEREBY GIVING RISE TO

FINANCIAL CONSTRAINTS AND CONSEQUENT FAILURE TO MEET

STAFF SALARIES AND PAYMENT TO THE CONTRACTOR.

4. ZCCM INVESTMENT HOLDINGS WAS LOOKING FOR A

STRATEGIC PARTNER FOR THE DEVELOPMENT OF MAAMBA MINE

AND A THERMAL POWER PLANT TO PROVIDE A READY MARKET

FOR THE COAL PRODUCED AT THE MINE. NEGOTIATIONS WITH

THE PREFERRED BIDDERS TO PARTNER WITH ZCCM

INVESTMENT HOLDINGS HAD REACHED AN ADVANCED STAGE.

MR. SPEAKER,

THE CURRENT STATUS IS AS FOLLOWS:

1. THE CONTRACT FOR SCIROCCO WAS FOR ONE YEAR AND

EXPIRED AT THE END OF DECEMBER 2009. THE CONTRACT WAS

NOT RENEWED DUE TO THE FACT THAT ZCCM INVESTMENT

HOLDINGS HAD BY THAT TIME CONCLUDED NEGOTIATIONS

WITH THE STRATEGIC PARTNER.

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2. THE HOUSE MAY BE AWARE THAT NEGOTIATIONS WITH THE

PREFERRED STRATEGIC PARTNER WERE CONCLUDED ON 18TH

DECEMBER 2009 WHEN ZCCM INVESTMENT HOLDINGS AND

NAVA BHARAT (SINGPORE) PTY LIMITED (NBS) SIGNED A

SHARE SALE AND PURCHASE AGREEMENT (SPA). NAVA BHARAT

ACQUIRED 65% EQUITY STAKE IN MAAMBA COLLIERIES

LIMITED. FOLLOWING THE SIGNING OF THE AGREEMENT, A

COMPLETION COMMITTEE WAS APPOINTED TO FINALISE ALL

CONDITIONS PRECEDENT TO EXECUTION OF THE SPA AGREED

BY ALL PARTIES. THESE CONDITIONS INCLUDE:

MINISTRY OF FINANCE AND NATIONAL PLANNING BEING THE

MAJORITY SHAREHOLDER IN ZCCM INVESTMENT HOLDINGS

FORMALLY CONSENT TO THE SALE OF SHARES;

ZCCM INVESTMENT HOLDINGS, NAVA BHARAT, ZAMBIA

DEVELOPMENT AGENCY (ZDA), GOVERNMENT OF THE REPUBLIC

OF ZAMBIA AND MAAMBA COLLIERIES LIMITED EXECUTE THE

INVESTMENT PROMOTION AND PROTECTION AGREEMENT

(IPPA);

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MCL EXECUTES A BANKABLE POWER PURCHASE AGREEMENT

(PPA) AND CONNECTION AGREEMENT WITH ZAMBIA

ELECTRICITY SUPPLY COMPANY (ZESCO);

MAAMBA COLLIERIES LIMITED OBTAINS ALL WATER RIGHTS

AND PERMITS AS NECESSARY FOR THE COMPANY BUSINESS;

AND

5. NAVA BHARAT PRODUCES AN ACTION PLAN IN RESPECT OF ITS

PLAN TO PROCURE DEBT FINANCE FOR THE MAAMBA COAL

MINE AND THERMAL POWER PROJECT. THE PLAN REQUIRES THE

FULFILLMENT OF POWER PURCHASE AGREEMENT AND THE

ASSURANCE THAT THE MINING AND SURFACE RIGHTS ARE IN

THE OWNERSHIP OF MAAMBA COLLIERIES LIMITED.

THE CONDITIONS PRECEDENT ARE EXPECTED TO BE FINALIZED AND

ENABLE THE TRANSACTION TO BE EXECUTED BY 1 ST APRIL 2010.

IN THE MEANTIME, ZCCM INVESTMENT HOLDINGS AND NAVA BHARAT

ARE EXPEDITING THE COMMENCEMENT OF OPERATIONS,

PARTICULARLY WITH RESPECT TO MINING. IN THIS REGARD, THREE

SENIOR POSITIONS, GENERAL MANAGER (MINING OPERATIONS),

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HUMAN RESOURCES MANAGER AND FINANCE MANAGER WERE

ADVERTISED IN THE LOCAL PRESS. THE TASK OF THE SENIOR

MANAGEMENT WILL BE TO UNDERTAKE A SKILLS AUDIT OF THE

EXISTING LABOUR FORCE AND COME UP WITH AN APPROPRIATE

STRUCTURE IN RESPECT OF THE TECHNOLOGY TO BE ADOPTED FOR

THE MINING OPERATIONS.

MR. SPEAKER,

THIS IS AN INDICATION THAT THE CHANGE OF MANAGEMENT

CONTROL WILL NOT RESULT IN ARBITRARY REDUNDANCIES. THE

COMPANY HAS NO INTENTION OF LAYING OFF WORKERS BUT RATHER

TO INCREASE THEIR PRODUCTIVITY BY PUTTING IN PLACE AN

EFFICIENT STRUCTURE. CURRENTLY, MAAMBA COLLIERIES HAS A

WORK FORCE OF 608 EMPLOYEES.

NAVA BHARAT HAS ALSO BEGUN TO ENGAGE MINING EQUIPMENT

SUPPLIERS TO ENABLE COMMENCEMENT OF OPERATIONS AS SOON

AS POSSIBLE. IT IS ENVISAGED THAT MINING OPERATIONS WILL BE

RESUSCITATED BY THE NEW MANAGEMENT AS SOON THE

TRANSACTIONS ARE CONCLUDED.

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THE COMPANY INTENDS TO INVESTMENT US $108 MILLION IN THE

RECAPITALISATION OF THE MINE AND INSTALLATION OF THE NEW

COAL HANDLING AND WASHING PLANT.

MR. SPEAKER,

THE NEW INVESTOR WILL DEVELOP A COAL FIRED POWER PLANT OF

A MINIMUM GENERATING CAPACITY OF 270 MEGAWATTS, USING THE

LOW GRADE COAL OF MAAMBA COLLIERIES LIMITED. PREVIOUSLY

THIS COAL WAS REGARDED AS UNSELLABLE MATERIAL. THE POWER

PLANT IS EXPECTED TO COST US $500 MILLION. IT IS ENVISAGED

THAT THE PROJECT WILL CREATE 300 JOBS.

MR. SPEAKER,

IN CONCLUSION I WISH TO REMIND THE HOUSE THAT THE INITIAL

DEVELOPMENT OF THE COAL MINES IN ZAMBIA WAS PRIMARILY

TARGETED AT PROVIDING COAL FOR COPPER SMELTING PURPOSES

ON THE COPPERBELT. HOWEVER, THE MODERNIZATION OF THE

SMELTERS BY ADOPTING NEW TECHNOLOGIES HAS SEEN A

SIGNIFICANT DROP IN THE DEMAND FOR COAL. IT FOLLOWS

THEREFORE, THAT NEW MARKETS FOR COAL SUCH AS POWER

PLANTS AND EXPORT BE FOUND. IT IS HOPED THAT THE NEW

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OWNERS OF MAAMBA COLLIERIES LIMITED WILL BE DILIGENT IN THE

DEVELOPMENT OF THE THERMAL POWER PLANT IN SINAZONGWE AND

BRING ZAMBIA THE MUCH NEEDED RELIEF FROM POWER OUTAGES.

I THANK YOU SIR.

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