Job Cuts Looms at Mopani Mine, Increased Power Tariffs and unpaid VAT refunds among issues blamed

Management at Mopani Copper Mines says job losses are inevitable as the current business environment has become challenging.

In a staff memo dated September 28th 2018, management has since proposed a raft of cost saving measures it says will keep the mining giant afloat.

It however says it is inevitable that the implementation of these measures will result in some employees being excess to requirements.

It is also proposes to retrain and redeploy some employees to other areas within the company and that at an appropriate time, it will offer employees Voluntary Separation should need arise.

The mining company signaled out the low own source copper output, increased power tariffs and unpaid VAT refunds among others as some of the key reasons that risk making the operations of the mine unsustainable going forward.

Management has since decided to close down its Lusaka office and move all the functions to Kitwe.

It has proposed a review of its organogram across the functions to promote flatter structures, a further review and optimization of its Corporate, General Admin and Surface Engineering costs.

The company also wants to review overhead costs to bring these in line with copper production levels.

It further wants to consolidate Hospital Services to provide a quality but cost effective medical service and also discontinue its Avex Charter.

Management has also proposed to consolidate and rationalize service contracts, open Wusakile and Malcolm Watson medical facilities to Mopani Contractors and implement market related membership fees.

It also wants to market its Training Centre to offer external training and determine full absorption charge to external trainees and further promote energy saving initiative such as bulbs, fans, electrical installations

It says these measures are for immediate implementation while others are for after due diligence.

“Since inception, over 4 billion dollars invested in expanding and upgrading infrastructure at both Nkana and Mufulira. Our shareholders have believed in our potential and continued to invest even in difficult years. Investments in three new shafts (Synclinorium, Mindolo Deep, and Mufulira Deep will improve our production levels, efficiencies/safety/safety as well as extend the life of the mines,” part of the memo read.

“The projects have progressed well with the support of our shareholders. The Synclinorium shaft was first to be commissioned and is actively hoisting. This is significant because the operations at Synclinorium are a good indication of the efficiencies we can expect to achieve companywide when we complete all our projects.”
It further reads, “The Mindolo and Mufulira shafts are scheduled to be commissioned at the end of 2019 while works at the Nkana Concentrator commenced this year and are progressing well.”

“The company has however faced major challenges towards achieving its goals, such as the low own source copper output, increased power tariffs, unpaid VAT refunds among others. The result of this is that the company has struggled to reduce the unit cost to a low level below the selling price of copper. The average unit cost of production as at August 2018 was above the average LME copper price. Unless, we take some proactive measures to address this situation we face the risk of our operations not being sustainable going forward,” it reads.

“In order to address the high unit cost and mitigate the deficit situation, it has become a matter of utmost urgency that cost containment measures are implemented in order to survive this period before full commissioning of the shaft projects, upon which the future of the company rests.”

Further, “Management is working towards implementing cost containment measures meant to ensure viability of our operations. As a matter of urgency, we need to demonstrate our commitment to our shareholders and for our own sake that we can take action to stem the trend of losses. Failure to which we may risk losing shareholder confidence and support in keeping us afloat as we move towards attaining our vision of being a self sustaining operation by the year 2023.”

Source: Lusaka Times