Lusaka, Zambia: London-listed mining company Vedanta Resources Plc, which owns a controlling stake in Indian copper and zinc producer Sterlite Industries Ltd, plans to set up a power project in southern Africa to meet its own requirements and cater to increasing electricity demand in the region.
Vedanta has made the single largest investment in Zambia, to the tune of $1.5 billion (Rs6,810 crore). It acquired a majority stake in Konkola Copper Mines Plc in 2004, which now has a capacity to produce 150,000 tonnes of copper annually.
Zambia’s power demand is around 1,700MW, which is expected to rise substantially because of demand from the copper mining sector.
Zambia is a major exporter of copper and its overseas sales are expected to expand as global demand for the metal increases.
“To start with, we are looking at a capacity of 300MW. We plan to set up a power project with a capacity of up to 1,000MW,” said Rahul Kharkar, head of corporate affairs and spokesperson for Konkola Copper. “Our own captive requirement will be around 250MW by 2012, the balance will be sold to the grid.”
The 1,000MW coal-based power project will require an investment of around $1.2 billion and Konkola Copper plans to supply the surplus power not only to Zambia, but also to other countries in the region such as Mozambique, Botswana, Malawi, Angola, Lesotho, Namibia, Democratic Republic of Congo, Swaziland, Tanzania and Zimbabwe, which are part of the Southern Africa Power Pool, or Sapp.
Sapp allows transmission of power from the power-surplus to power-deficit areas across these countries through grid interconnectivity. Although Africa is rich in energy resources, it has a huge power deficit. “We are looking for the coal mines for the project in Botswana and Zambia,” said Kharkar.
Grid interconnectivity through Sapp will allow Konkola Copper to set up a power project in any region where coal is available and wheel that power to the grid without bringing the coal to Zambia, thereby minimizing costs.
Konkola Copper had revenue of around $700 million in 2008-09, which it expects to increase to $900 million in the current fiscal.
India recently extended a $75 million line of credit to Zambia during the visit of vice-president Hamid Ansari to that country.
India has also given a $50 million line of credit agreement to Zambia for the 120MW Itezhi Tezhi hydropower project, a venture between Zambia Electricity Supply Co. Ltd (Zesco) and Tata Africa Holdings (SA) Pty Ltd.
Konkola Copper also plans to invest an additional $1.5 billion in its deep-water copper mining project that will increase its copper ore mining capacity from 2.2 million tonnes per annum (mtpa) to 7.5 mtpa, helping it to increase capacity to 500,000 tonnes within three years.
“This investment will go towards de-bottlenecking the project. We currently operate five mines, of which two are underground and three open-pit mines,” said Kharkar.