Maravi

‘Govt has obligation to create conducive business environment’

‘Govt has obligation to create conducive business environment’
Written by Nchima Nchito Jr
Tuesday, October 06, 2009 7:40:19 AM

ECONOMIC consultant Professor Oliver Saasa has advised the government to be wary of creating a wrong investment climate in the country.
Commenting on the problems at Maamba Collieries, which have led to operations grounding to a halt, Prof Saasa yesterday said the government had an obligation to create a conducive business environment. He said it was wrong for the government to appear to be part of the problem and not a source of solution.

“Our local investors operate without incentives given for attracting FDI [Foreign Direct Investment]. Hence it is sad when a local investor shows interest in a key mine and those efforts are frustrated,” Prof Saasa said.

He said the cost of the closure of Maamba mine had far reaching consequences than the affected employees.

“We do not want the development of another ghost town again. What happened to Luanshya after the close of the mines was a terrible thing that should not repeat itself,” he said.

Prof Saasa said while commerce minister Felix Mutati emphasized the need to reduce the cost of business and attract investments into the country, the happenings at Maamba mine negated these efforts as a wrong picture was being painted even to foreign investors.

Efforts to reach mines minister Maxwell Mwale and Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) chief executive proved futile by press time.

Operations at Maamba Collieries ground to a halt after its main contactor Oriental Quarries terminated its contract.

In an interview last Friday, Scirocco Enterprises Limited managing director Maustafa Saadi confirmed the development.

Scirocco Enterprises is the holding company of Oriental Quarries.

“We as of 1st October terminated all mining activities because of the mine’s failure to honor its financial obligations to us and have given them 30 days notice. We entered into a contact with the mine in December last year and in that period the mine has not been paying us our dues,” he said.

Asked on how much Oriental Quarries had invested into the mine, Saadi pegged the figure at approximately US $7million.

Saadi said a lot of work went into resuming operations at Maamba mine.

“Our trucks and other machinery are stationed there. In addition we have a workforce of 150 people who are based there. Also, we had to lease some equipment from various suppliers. All these are financial obligations that we have to meet but we are having problems doing so because we are owed a lot of money that Maamba is not paying,” Saadi said. “Even as we speak, machinery meant for the mine has arrived in Durban that we will have to pay for. The failure of Maamba to meet its financial obligations has jeopardized our continued operations as a quarry.”

Saadi said Oriental had mined 100,000 tonnes of coal to date but only 5,000 tonnes had been sold.

Saadi said his company had on several occasions contacted ZCCM-IH over the matter but no action had been taken to resolve the situation.

“We have since contacted our lawyers to notify the mine that we have started demobilizing and will completely vacate the mine on the expiry of the notice and begin the process of getting a settlement which will include damages and losses,” Saadi said.

On the contrary, Mwale told Parliament last Friday that coal production had continued uninterrupted leading to the production of 88,955 tonnes at the mine since April.

In a ministerial statement, Mwale said Maamba had on site 40,000 tonnes of washed coal, which was equivalent to K16 billion as well as 8,000 tonnes of raw coal equivalent to K3 billion.

Mwale said US $5.3 million had been spent on reviving the Maamba mine contrary to speculation that the money had disappeared.

Mwale also dispelled assertions that there was no political will on the part of the government to improve operations at the mine.

ZCCM-IH acquired 100 per cent shareholding in Maamba Collieries but the government retained a golden share with rights to appoint a director to sit on the board.

The company earlier this year appointed Nava Bharat of Singapore to operate Maamba Collieries and construct a thermal power station at the mine, beating Konkola Copper Mines (KCM)’s parent company Vedanta Resources.

Maamba Collieries is estimated to have 78 million tonnes of known coal reserves due to last over 70 years while the coal mine has capacity to produce up to one million tonnes of coal a year.

Labels: MAAMBA COLLIERY, OLIVER SAASA

posted by MrK @ 6:41 AM