MAAMBA COLLIERIES LIMITED (MCL)


The Government of the Republic of Zambia (GRZ), through the Zambia Privatisation Agency (ZPA) wishes to privatise Maamba Collieries Limited (MCL) through an acquisition of a controlling stake by suitably qualified private sector investors. GRZ approved the sale of at least 70% shares by competitive tender. Government is open to considering various innovative arrangements, as may be proposed by the potential investor, that would result in control of MCL moving to the private sector and result in the recapitalisation of Zambia's major coal producer.

Interested party(ies), either individually or as a consortium, may submit their Expression of Interest to ZPA.

The Company

MCL is the largest producer of coal in Zambia. It is a wholly owned Government company engaged in the mining and selling of coal to major industries in Zambia, including the newly privatised companies in mining, chemicals, cement and breweries, as well as for exports to neighbouring countries. MCL is the largest employer in the Southern part of Zambia and cradles the hopes and aspirations of a large proportion of the population in the Southern Province. It is located in Maamba town 352 km from Lusaka the capital city of Zambia.

The main facilities available at MCL mining operations include the Coal Processing Plant (washing plant) , water treatment plant, pump station, weigh bridges, engineering workshops, and other support infrastructure.

MCL was incorporated as a limited company in 1971 under the ownership of the Government through the Zambia Industrial and Mining Corporation Limited (ZIMCO).

Mine Capacity and Reserves

A total of 78.2 million tonnes of coal reserves is estimated available in the MCL assigned area, of which 60.2 million tonnes is proven and 18 million tonnes is probable. Further exploration and reserve development is in order as the underground potential may well be greater than known today.

There are two open cast mines operating at Maamba in the Kanzize and Izuma basins with an annual capacity to produce between 600,000 and 800,000 metric tonnes of saleable coal, depending on demand and other constraints. The reserves in the Maamba assigned area can last for at least ninety seven (97) years assuming that the mine is operating at full capacity, that is producing 800,000 metric tonnes of coal per annum.

The Coal Preparation Plant(CPP) has a rated capacity to wash about 700,000 to 800,000 metric tonnes of coal per year while the ropeway has the capacity to transport between 600,000 to 700,000 metric tonnes to Masuku Railway Terminal per annum. Both however require some refurbishment to achieve the said capacities.

MCL also mines magnetite ore at Namantombwa near Mumbwa town and it is used for coal washing as separating medium. Maamba's total requirement of processed magnetite stands at 870 metric tonnes per annum.

Market

MCL has a distinct transport cost advantage in the supply of coal to countries further north from South Africa and the domestic market. MCL has however not been able to exploit this potential due to historical under capitalisation. Export opportunities exist in Malawi, Democratic republic of Congo and other sub-regional countries.

Although current estimated demand for local coal is 240,000 tonnes per annum, it is possible to develop the local market further by improving reliability of coal supplies from MCL. Major domestic customers include the copper mines - Smelterco, Chilanga Cement PLC, the breweries, tobacco farmers, and manufacturers.

The current export market is estimated at 15,000 tonnes per month to Tanzania, Democratic republic of Congo and Malawi.

Financial Performance

Year ended 31st March .....

 (Figures in K'000)
2003
2002
2001
Turnover
17,126
18,237
19,379
Profit & Loss
(26,185)
(31,190)
(7,869)
Fixed Assets
3,980
4,685
4,154
Current Assets
6,465
6,788
5,351
Current Liabilities
23,458
21,951
10,886

Privatisation Process In order to arrest the declining production that MCL was experiencing, the assistance of ZCCM-Investment Holdings PLC (ZCCM-IH) was sought to assist in managing the Mine. In June 2004, a combined ZPA/ZCCM-IH Task Team was installed to save the company from imminent closure. The Task Team has put in place operational measures that have already resulted in increasing production from an average of 10,000 tonnes per month to 30,000 tonnes per month (ROM). However, sales have to be improved in order for MCL to fully benefit from this increased production. A contract miner Holy Mining Limited was also installed in 2003 and is assisting with the provision of mining equipment and with the actual mining. As part of privatisation, Government is willing to consider a number of measures that would improve the viability of MCL. These include the following :-

  • Government taking over the debt owed to quasi Government institutions.

  • Environmental Liabilities: Government would allow MCL to adopt and perform the Environmental Management Plan as will be put forward by the successful bidder. MCL would then not be penalised by Government for any past historical environmental breaches committed prior to privatisation, provided it adheres to the agreed Environmental Management Plan.

  • Employees and Ex-employees: Government will continue to settle all valid claims by ex-employees of MCL that it has agreed to take over. It will be proposed that the terminal benefits of existing employees be computed as at the time of privatisation. Agreement would then be sought from the existing employees that they be paid their benefits over a period to be agreed with the employees, preferably over 2 - 3 years.

  • Government prefers that ordinary trade creditors and the Investec/IDC loans remain the responsibility of MCL.

    However, ZPA will remain open to other proposals that potential investors may make as part of the bidding process.

    Expressions of Interest are welcome from suitably qualified potential investors.

    Contact Details

    The Chief Executive,
    Zambia Privatisation Agency
    Telephone numbers 260-1223859, 227735, 222858, 220177, 227823, 227791, 227846 & 227851
    Fax 260-1-225270, 225390

    Attention:Mrs Florence Mumba

    Mail to: fmumba@zpa.org.zm

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