28 April 2013

Zambia: High Court Grants FQM Injunction Against Zesco

THE Lusaka High Court has granted Kalumbila Mine of Solwezi an injunction to restrain Zesco from engaging a Chinese company to construct a power line from Lusaka to the mine.

This is in a matter in which Kalumbila Mine and First Quantum Minerals as first and second applicants, respectively, dragged Zesco to court for awarding the contract for the power line to China Jiangxi Corporation and Technical Co-operation.

FQM said in the affidavits that it was financing the construction of the power line from Lusaka West to Kalumbila Mine at a cost of US$250 million but was not pleased with the contractor selected by Zesco.

FQM and its subsidiary, Kalumbila Mine, said Zesco picked the Chinese company who it felt had a high bid when other bidders whose prices were competitive with strong capabilities and proven track records could have won the tender to construct the power line.

The mining giant said the project needed to be implemented quickly but not at the high cost of the contractor Zesco selected because consumers would have to bear high electricity tariffs.

"We are following the due legal process that we believe is in the best interest of FQM, Zesco and the public. We expect that the matter can be speedily resolved through the arbitration discussion to ensure the construction of this power line that will have significant impact on Zambia's continued growth is done cost-effectively and on time," reads the affidavit in support of the injunction.

But in the injunction obtained by the Sunday Times, the court granted the injunction, saying Zesco, its servants or agents should not direct or instruct its preferred bidder to proceed with any works at the Trident Project near Kalumbila in North-Western Province.

"Take notice that should you, the named respondent by yourselves, your servants, agents or whom whatsoever fail to obey this order, you shall be liable for contempt of court," the court said.

FQM also undertook to indemnify Zesco for any damages that it would suffer as a result of the injunction should the court later be of the view that the order should not have been granted.

He said that the inter-parte hearing of the application would be held on May 8, 2013.

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