CEC’s Owen Looks Northwards for Love
Owen Silavwe CEC MD

If you ever watched the movie “Love Actually”, you can understand what a sweet romance that CDC and CEC had. Sadly, the romantic acquisition ended before it could happen and CEO Owen Silavwe and his management were left with the feeling of “what could have been” had the deal gone through.

But analogous to failed relationships, Companies must move on. This is exactly what Owen’s CEC has done. SENS Announcement of LUSE on 2 August 2018, CEC informed its Shareholders and the general public that the Company had just signed a long term contract of up to 78MW of electricity to Metalkol SA (“Metalkol”). Metalkol is a major cobalt and copper tailings reprocessing operations in the Democratic Republic of Congo (“DRC”).

According to metalbulletin.com, in 2010, Metalkol was given the rights to develop the remainder of the KMT project which used to be held by First Quantum Minerals. In addition, the DRC government closed and sealed off the $750 million project back in September of 2009, arguing that First Quantum had breached contractual terms by failing to develop the project on time.

Since then, Metalkol has been increasing its asset base. In 2015, the Eurasian Resources Group signed a deal for $700 million to construct Metalkol copper-cobalt project. This puts into perspective the scale of power supply needed that attracted Owen. It this is not enough to heal a broken heart, I don’t know what is.

Details of the Power Supply Deal agreed with Metalkol and DRC’s national electricity company Societe National d Électricite (“SNEL”) is that it secures electricity supply to Meltakol for up to 10 years in two phases. This is achieved through a contract known as a wheeling agreement which specifies a wheeling charge paid to the intermediary SNEL. A wheeling charge is a currency per megawatt-hour amount that a transmission owner receives for the use of its system to export energy.

Details of the power off taking will be 62MW (which coincides with the first part of the Eurasian Project) and this will run until the second quarter of 2019. This will then be followed by a supply ramp up to 78MW per year during the second phase and the remainder of the contract.

The far from “heartbroken” Owen described the agreement as a demonstration of CEC’s commitment and agility. The CEO further made a promise to continue to meet the specific and unique requirements of customers in Zambia and the DRC market. CEC has pedigree in supplying mines and this signal from the CEO indicates that if there is a mine in Congo, he will go after it. That is a part of his strategy. Being a member of the Southern African Power Pool helps a great deal as this gives his company access to a lucrative market.

For now, Shareholders in CEC can smile and note that their Management team is doing all it can to ensure protection of value creation. Let’s see how far Owen can take this romance.

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