Nava Bharat Pte Ltd, the Singapore unit of Hyderabad-based Nava Bharat Ventures Ltd, has acquired 65% equity stake in Maamba Collieries Ltd in Zambia.
The acquisition entails an initial cost of $26 million for Nava Bharat. The deal is expected to be completed by February 2010, the company said, in its filing to BSE.
The company has signed a share purchase agreement with the government of Zambia through its vehicle ZCCM Investments Holdings Plc (ZCCM-IH), an investments holdings company which is quoted on the Lusaka, London, and Euronext Stock Exchanges, and has the majority of its investments held in the copper mining sector of Zambia. ZCCM holds 100% paid-up capital in Maamba Collieries.
The acquisition was following Nava Bharat’s selection in a global tender floated by the Zambian government to induct a private majority partner.
Both Nava Bharat and the ZCCM will look at optimizing the mine operations to obtain positive cash flows and set up a 300 MW power plant in Zambia. The coal mine has reserves of 65 MT of high-grade coal and an equal amount of low-grade coal, which will be used as feedstock for the power plant.
The integrated project cost is estimated at $550 million and Nava Bharat’s share of equity contribution to the project will come to $108 million while ZCCM will bring $57 million.
Speaking on the development, D Ashok, chairman, Nava Bharat said, in a statement, the acquisition is a key step in our diversification in the power business. “It meets our intent to pursue options where the project is de-risked in terms of the key input, that is coal,” added Ashok.
Nava Bharat currently has a capacity of producing 237MW electricity in Andhra Pradesh and Orissa. It also produces ferro alloy and has a capacity of 1.2 lakh MT of Manganese and about 75,000MT of Chrome alloy. Apart from this, it produces 3,500 TCD of sugar. In the last quarter, the net sales and net profit of the company were Rs 1,345.66 crore and Rs 520.57 crore respectively.
In another development recently, Malaxmi Energy Ventures has entered into preliminary talks with Essar Power to sell its stake in the 2250 MW Nava Bharat Power Pvt Ltd in Orissa.