Maamba to Borrow $550 Million for Zambian Power PlantMatthew Hill
Maamba Collieries Ltd., the Nava Bharat Singapore Pte Ltd. unit building Zambia’s first coal-fired power plant in 50 years, hopes to complete $550 million in debt financing by August, its chief financial officer said.
The company is in talks with lenders including the African Development Bank, China Development Bank, Standard Bank Group Ltd., the CFO, V. Lakshmi Narayana, said. Standard Chartered Plc and Barclays Plc also expressed interest in funding Maamba’s power-plant project, he said.
“We have seen a very high level of interest,” Narayana said in an interview yesterday in Maamba, about 240 kilometers (159 miles) southwest of the capital, Lusaka. “We received expressions of interest almost 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 cuts in Africa’s biggest copper producer. 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 percent of Maamba, while the Zambian government owns 35 percent through ZCCM Investments Holdings Plc. ABSA Group Ltd. is advising Maamba on its financing.
The company is also talking to the Development Bank of Southern Africa Ltd. and the Bank of China, Narayana said. The group of Chinese lenders will probably provide the biggest share of funding, he said.
Zambia has a capacity to produce about 2,000 megawatts of power, almost all generated by hydro plants such as Kariba North, which lies on a dam on the border with Zimbabwe. 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 Ltd. for most of its profit, the company is also considering exporting coal to the Democratic Republic of Congo by rail, said Janardhan Lavu, corporate affairs manager.
The company sells 20,000 tons to 30,0000 tons of coal monthly to Zambian cement factories, steel plants, copper mines and fertilizer 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 said.
Mining companies want to take advantage of Zambia Railways Ltd. plans to spend $1.5 billion to resuscitate the country’s rail network. Konkola Copper Mines this month sent its first copper by rail from its mines in Chingola by rail to Tanzania in five years.