MINING

Zambia 2017 | ENERGY & MINING | B2B

With expected increases in demand from regional countries and beyond and investments in the sector, mining will continue to play a key role in Zambia's economy.

Ashwin Devineni
ASHWIN DEVINENI
Resident Director
Maamba Collieries Ltd
Dr. Pius Kasolo
DR. PIUS KASOLO
CEO
ZCCM Investment Holdings Plc

How has your mining line of business fared in Zambia?

Ashwin Devineni Zambia has coal, and it will benefit from utilizing it. There is a fair bit of scope to increase coal-generated power operations in Zambia, and Maamba Collieries is set to expand into phase two of the project, by a further 300MW, since the transmission and water systems cater to 600MW. This should take just two years to complete once construction commences; however, we will only begin constructing once we have assurance of demand from a committed client base. The government, through the Ministry of Energy, remains committed to give the go-ahead on this expansion, since it will have a positive impact on domestic power generation levels.

Dr. Pius Kasolo In spite of all the difficulties in the sector, a number of the mining firms in our portfolio continued to invest in equipment to increase production and also to reduce the cost of production. In 2016, President Lungu commissioned the USD323-million Synclinorium Shaft at Mopani Copper Mine's Nkana shaft in Kitwe. The shaft will provide Mopani with access to about 115 million tons of ore at a grade of 1.9% copper and 0.09% cobalt. We are waiting to commission Ndola Lime's VK2 Kiln and have so far invested more than USD100 million in the operation. Ndola Lime used to be the only serious lime producer in the country, but there are new entrants into this market, which has forced us to compete. Obviously, the downturn in copper prices was a severe challenge; however, we expect an improvement in copper prices, with continued demand from China as well as what could be increasing demand from the US. What is more, there are a number of African nations with strong growth, above 5%, and we see these markets as places for serious growth potential.

What are the challenges facing mining companies in Zambia?

AD Mining companies in Zambia are not getting their due share of energy owing to the severe power deficit. On the other hand, ZESCO has been grappling with an asset liability mismatch in which the old power tariff to mining companies is no longer cost reflective. The Minister of Energy is spearheading a tariff revision, and we are hoping that mines will cooperate.

What is the importance of PPPs for Zambia's future economic success?

PS President Edgar Lungu has recognized the importance of PPPs, and has even appointed someone at the state house to look into this. This is a start and will drive further developments in this area. We need jobs to ensure economic development, and we want to see this happen in any way we can. From the government's point of view, the best way to ensure jobs are created is to avoid 100% state-owned companies to allow private sector participation. From our point of view, we want to bring capital and grow businesses through PPPs.

What lies ahead in 2017?

AD First, we will roll out Phase II of the plant, which will be a full-time job in itself. ZCCM, our shareholder, owns 35% of Maamba Collieries and together both the Sponsors would like to usher in the expanded capacity in the near future. Nava Bharat Group has also begun diversifying. One of the sectors we have been looking at is agriculture. In fact, we are working to get the necessary approvals to commence preparation of 10,000ha for sugar plantation and processing in the northern province. Here we also plan to set up a plant that will use the sugarcane post-crushing to generate power.

PS At the moment, there is a large gap in the energy market, and we want to explore how we can fill that gap. We have a few projects, such as Maamba, that we believe can truly be game changers in this area. Renewable energies, such as solar, also have a great deal of potential, and we plan to devote a great deal of time looking into ways to develop and integrate technologies that stabilize the grid so that there is always a constant supply of electricity. This might be something like a hybrid technology combining lithium battery power with the traditional solar grid in order to store energy and distribute it when it is needed. Finally, we also looking at micro-hydro power stations that can be installed in small river areas and provide energy to smaller communities and more rural areas.