Maddhapara mining hits rock bottom

The country's lone hard rock mining company at Parbatipur in the northern Dinajpur district should have been a great moneymaker in the Tk6,000-crore domestic granite market.

Instead, the company now stands as an example of serious mismanagement and losses, sources say.

After going into commercial operation in 2007, the Maddhapara Granite Mining Company Ltd (MGMCL) has incurred losses amounting to Tk593 crore till June 2018.

In the past two years, the company, however, made Tk7 crore and Tk22 crore operational profits, official documents show.

But, these rather insignificant profits pale in comparison to the huge potential of the company. It could grab only a 6% slice of the domestic granite market so far. The rock market has a massive 20-25% annual growth which is met with imports.

The reason why Maddhapara is performing poorly can be found in the way the company's owner Petrobangla handled the mine's operating contractor Germania-Trest Consortium (GTC) – a joint venture of Germania Corporation Limited and Belarusian Trest.

The GTC was appointed as the mine's operator in 2013 for six years at a cost of Tk1,400 crore to extract 9.2 million tonnes of granite. But, it could produce only 3.75 million tonnes by the time its contract expired in 2019.

During a large part of the contract period, the GTC could not produce rock and sat idle because of a delay in the supply of required equipment. Besides, the contractor did not get paid in time.

GTC could not meet 52% of production target

Despite having its original contract with the GTC coming to an end two years ago, Petrobangla is yet to find a replacement. So, it has kept on extending GTC's contract to carry out rock extraction.

"We are awarding an extension to the existing contractor as the production of the mine is doing good," said Nasrul Hamid, state minister for power, energy and mineral resources.

The prime minister has directed the authorities to continue observing the performance of the GTC, he added.

"We will appoint a new contractor if the existing contractor continues to perform poorly," he continued.

Nasrul Hamid also noted that the mining company incurred so much loss because of various issues, including delayed bill payment to the contractor.

Anisur Rahman, senior secretary to the Energy and Mineral Resources Division, attributed a large share of the responsibility for the loss to the inefficiency of the mine's developer Korea South-South Cooperation Corporation (Nam-nam). 

Nam-nam, the Korean company,  was tasked with developing the mine in 1994 under a suppliers' credit, he mentioned, adding that the company was supposed to complete it by 2001, but instead finished it in 2007.

The project cost escalated many times and eventually, Nam-nam milked out Tk1,014 crore.

From 2007 to 2012, the mine produced 20 lakh tonnes of rocks but made a loss of Tk132 crore. 

Then, GTC was given the operation.  The company was to extract 90 tonnes of stone within six years of the contract period but could produce no more than 41% of the amount within the time that expired in February 2019, said Anisur Rahman.   

The GTC received 51% of the contract amount worth Tk712 crore during the time. Over the period, the mine operating company was running at a loss.

"However, over the last three years, the mine has become a profit-making company. Now we should try to be stable," Anisur Rahman added.  

Mine experts and economists, however, opined that the mine has been losing its prospect due to an absence of proper administrative monitoring and qualified contractors.   

Mine and energy expert Professor Dr Badrul Imam told The Business Standard, "The mine will continue to make profit, if we extract rock at a targeted volume. 

"For that, the authorities should appoint a qualified mine developer and efficient management."   

The annual demand for rock in the country is around 1.5 crore tonnes. Of the total demand, only around 10 lakh tonnes are supplied by the Maddhapara Granite Mining Company.

Therefore, public and private developers have to import the essential construction material. 

 Uncertainty looms again 

While the GTC is working under contract extension – slated for expiry in July this year, the authorities could not appoint a new contractor in the last two years.

Senior Secretary Anisur Rahman pointed out, "We floated a tender last year inviting developers and received good response from both home and abroad. But due to the pandemic, the bid evaluation is being delayed." 

He believed that a new contractor could be appointed before the expiry of the existing contract. 

Sources at the company said if a new contractor is not selected in due time, the production in the mine will be halted. That would lead to damage to the mining machinery, they observed.

The international tender notice posted at the company's website in August 2020 invited eligible global management firms for operation, development, maintenance and related works to develop 15 units in the mine and produce 88.5 lakh tonnes of stones in six years. The tender was scheduled to close on 19 October 2020 as per the extended period.