■ Jeff Kapembwa
LUSAKA—As a consequence of the COVID-19 pandemic, dwindling international metal prices and a concoction of other operational challenges; some foreign mining companies are scaling down their operations in Zambia in order to remain sustainable.
Three leading mines in the country have been put on care and maintenance amid various developments, threatening their long term sustainability.
These are namely the Glencore majority owned Mopani Copper Mines, Maeterox owned Chibuluma Mines and Lubambe mines Plc. All their units are located in the country’s rich-mineral region, located over 440 kilometers from the capital, Lusaka.
Mopani had on 9 April invoked a “force majeure”, clause in their contracts allowing its contractual obligations to be ignored because of unavoidable circumstance and placed its Mufulira and Kitwe-based mining units under care and maintenance for three months.
This entails that the miner is able to place its 11,000 labour force on forced leave until it redresses concerns.
The Minister of Mines and Minerals Development, Hon Richard Musukwa has discouraged intentions by the three miners from ceasing operations in Zambia, arguing the reasons for such actions lack merit. He challenged all companies to reconsider.
While Mopani Copper Mines, has sought to rescind its initial plans to close down operations, it has since recalled all the 11,000 workers while engaging the relevant stakeholders on some of the effects on its operations, though indications show it could revert to care and maintenance amid gripping concerns. Though Zambia’s Government remains adamant describing the action ‘illegal’
Musukwa argues the 90 days’ notice given by Mopani Copper Mines was not meant to stop operations.
“We have noted that the Mine had intended to put its mines on care and maintenance.
But government takes great exception to such moves.” Musukwa maintains, Mopani Copper Mines should look at survival modes.
“One key element is to ensure that Mopani reduces its operating costs. We would like to speak survival modes and it is to use local contractors who are at low cost. The 90 days’ notice is not meant to stop operations. It is meant to ensure that a survival mode is structured, that is in the spirit of the law,” said Musukwa.
Chibuluma copper mines, another –Meterox-owned-miner seeks to place its operations under care and maintenance after much of its copper ore depleted a few years ago.
On Chibuluma mine, Musukwa says government rejected plans by Metorex Limited, although confirming receipt of a notice from Metorex. The government would not allow the mine to send people on the street as ‘the reasons given by Metorex have nothing to do with the COVID-19.’
“Yes Metorex has informed government. But the reasons for placing the mine on care and maintenance have nothing to do with COVID-19, but something to do with depleted resources. As government we have opened discussions with Metorex to provide some terms to avoid sending people on the streets,”
Other operational and fiscal policy challenges heightened after the Government’s revised budget in 2019 introducing a wide-range of taxations on mining coupled with delayed refunds in Value Added Tax in sold finished copper products has fueled concerns among foreign owners.
Zambia is Africa’s second producer of the red metal and mining contributes about 17% of countries GDP making this a very important segment of the countries economy.