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IT is an ambush for Mopani Copper Mines, the strongest allies of the PF government, to suspend mining operations in Zambia for at least 18 months, says mines deputy minister Richard Musukwa.
Swiss commodity trader and miner Glencore AG has announced that it is immediately suspending mining in Zambia and the Democratic Republic of Congo as the company battles dwindling cash flows, declining international copper prices and power outages.
According to analysts, the move to halt operations of its mining units will hurt Kitwe and Mufulira as well as the whole country in which mining is the economic mainstay.
In an interview, Musukwa said Mopani was one of the strongest allies of the PF government in terms of mine management and operations and its decision was an ambush and it would not be accepted.
“We would like them to continue and be on top of things in terms of operativeness,” he said.
Musukwa said Glencore must rescind its decision to suspend operations at Mopani and give the mine management a responsibility to work out a survival plan with local stakeholders.
“This is not in the interest of Zambia but a business decision in the interest of Glencore,” Musukwa said in an interview yesterday.
“Mopani is a production site for Glencore and not a business site and as such, it must be promoted to continue production and ensure it remains afloat. In 2009, Mopani management and the unions working together averted a crisis at a time the mine proposed suspension of operations. We prevailed over Mopani and made sure that it effected cost-saving measures in all areas. At that time, the unions even offered to suspend negotiations for conditions of service and increments in salaries as their contribution to resolve the crisis. Mopani management must provide a platform to the board with their unions as key stakeholders on the survival plan under this trying moment.”
He said it was extremely unfair for Glencore to close Mopani and begin to think of reopening after 18 months when mining analysts had predicted that copper price would rebound within that period.
He said the government needed investors to stand with the nation in difficult times such as this one when prices of commodities declined drastically.
“We all know that the prices of copper at the international market are not Zambia’s making; it is a global phenomenon that is as a result of crashing markets in China and the slow down intake of our copper in China,” he said. “For us, our role as government, which we continue to demonstrate, is that we need to manage an industry with predictable fiscal regime that promotes investment.”
Musukwa said the government backtracked on its earlier fiscal position of a higher fiscal regime in order to sustain mine operations battling adverse commodity prices on the international market.
He said the government would not allow a situation where mining towns are turned into ghost towns because of drastic decisions taken by investors.
About two weeks ago, Mopani communicated internally to its stakeholders that it was in a critical cash deficit with incurred cumulative heavy financial net losses amounting to US$140 million due to serious challenges the mining giant is facing that are threatening its future.
The company also laid off 19 expatriates that were on hefty salaries due to the huge operational and financial challenges it was facing.
Mopani’s announcement prompted several mines into announcing job cuts, citing declining metal prices, electricity crisis and unclear mining fiscal, all factors they said were making mining operations unviable.
Konkola Copper Mines on September 4 announced that it sent 133 workers on “recess” as it reviewed its Nchanga Integrated Business Unit, while CNMC Luanshya Copper Mines Plc yesterday closed its Baluba operation with over 1,600 workers forced to take leave.
