Friday, March 29, 2024

Govt questions Mines’s retrenchment of workers when Copper Price is above their trigger level

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Christoper yaluma
Christoper Yaluma

GOVERNMENT has questioned why mining companies were quick to effect what they termed as cost saving measures even when commodity prices were still above worst case scenarios which they had indicated in their business cases.

In a statement released to the media by Press Secretary at the Zambian Embassy in South Africa, Nicky Shabolyo, on measures taken by mining companies in times of low commodity prices, Mr. Yaluma said there was inconsistency in the way mining companies behaved when they decided to shed off their workforce on account of low prices and that they were not able to sustain their businesses.

Mr. Yaluma said most mining companies in Zambia had indicated in their business plans that the only times when operations would become unprofitable in Zambia would be when prices for commodities such as copper started trading at US$2, 500 and below.

He questioned why companies in Zambia have rushed to retrenching workers even when copper prices were currently going for US$4, 000 per tonne, which was way above the US$2, 500 which the mining companies had put up as the worst case scenario which could trigger such measures.

He questioned why companies in Zambia have rushed to retrenching workers even when copper prices were currently going for US$4, 000 per tonne, which was way above the US$2, 500 which the mining companies had put up as the worst case scenario which could trigger such measures.

“When copper prices were above US$9, 000 per tonne, these companies made windfall profits. It is mind boggling that they do not want to refer to these supper profits when it comes to low commodity prices.

One would expect that they should have made savings to cushion effects of bad times as what we are going through today but you find that all of them have externalised these profits,” Mr. Yaluma said.

Meanwhile, government has pressed on mining companies to diversify their operations by investing in power production in order to stabilise production in the industry.

Mines Minister, Mr. Christopher Yaluma, who is leading a Zambian delegation to the 2016 Investing in African Mining Indaba in Cape Town, South Africa, told the 4th Annual Ministerial Symposium yesterday, that with the low electricity tariffs in the country, mining companies could not expect Government alone to sustain their operations.

Mr. Yaluma said mining companies should consider going into joint ventures with Zambians and invest in a mix of power sources.

Others in the delegation are Mines Deputy Minister, Mr. Richard Musukwa; Finance Deputy Minister, Mr. Christopher Mvunga; Zambia’s High Commissioner to South Africa, Mr. Emmanuel Mwamba, senior officials from the Ministry of Mines and the High Commission of Zambia in Pretoria.

“We need some serious energy mix and mining companies must play a clear role. It is regrettable that we allowed the investors to do away with power plants when they took over the mines because they saw a cheap source of power in Zesco. We should go back to the ZCCM days when all divisions had their own power sources. I raised these issues at the Ministerial Symposium and the mining companies present acknowledged.”

The Minister pointed out that it could have been a lighter burden on Government had the mining sector shown willingness to support the proposal to take electricity tariffs to cost reflective levels.

Zambia currently ranks among countries charging the lowest electricity tariffs on the continent, a situation Mr. Yaluma said had made it difficult to attract private sector investment.

Currently Zesco pays about 11 cents per kilowatt for electricity generated locally and about 19 cents per kilowatt for imported power. The utility company in turn sales this at about five cents to the mines.

Currently Zesco pays about 11 cents per kilowatt for electricity generated locally and about 19 cents per kilowatt for imported power. The utility company in turn sales this at about five cents to the mines.

Mr. Yaluma said Government was working on normalising this as mandated by last year’s meeting of SADC Ministers of Energy which resolved that all member states should attain cost reflective tariffs by 2019.

He said this year’s mining indaba was taking place at a difficult time not only for Zambia but the African continent. He said it was gratifying that the African Union (AU), under the African Mining Vision, had directed countries to standardise instruments governing mining investment in all countries.

Mr. Yaluma said Zambia’s challenges stemmed from factors over which Government had no control citing the low water levels that have reduced the country’s energy generation capacity. This has consequently led to reduced low production in the mining and various other sectors. The challenges have been compounded by the low commodity prices which have greatly reduced on the country’s foreign exchange inflow.

42 COMMENTS

  1. Yaluma is another liability.

    Miles Sampa will ensure he Ministers put together forthe dream Team.

    I respect him, but he is diverting the problem from his Government to stakeolders.

    Another person at top wia lot about him- but ultimately nothing offer. trust Like all of you here TRUST Miles Sampa

    to take us to the promised land

    He has my vote does he have yours?

    Remember the name Miles Sampa
    Orane Alliance

    Thanks

    BB2014

    • At first, when the news about mine retrenchments made headlines, Kambwili blamed it on lower copper prices, dismissing load shedding as the main cause even when the mines indicated so.

      Why keep a workforce you are not going to use because the machines they use have no power to run them?

      Yaluma is now contradicting Kambwili the PF mouthpiece big time.

      Whatever evil agenda PF has ,will be scattered by people ‘s anguish.

      VIVA UPND and HH team.

    • People of Zamhia especially you gentlemen and women ruling Zambis should know that no foreigner will put his country on number 2 after Zambia. Me i live in Australia but my heart is in Zambia. I want to send money to zambia to build a house, start business, share with relatives and friends etc so is the foreigner investors who in zambia they always consider their origin first.
      So my advise is for these mines to be listed on LUSE and Zambians allowed to invest, this way at least most of money will be apent in Zambia. These whites/Chinese mubepelefye. We need to promote zambia ownership of small to large mine businesses.

    • Mr minister, these companies can sense when it time to harvest especially with poorly organized govts like yours. The companies have sensed the failure by your office to provide proper and informed guidance, hence their behavior.

  2. Yaluma shud not be any where near governmwnt ministries. Infact he shud be ine of those candidates ECL shud not adopt

    Very useless!!!!

  3. What the report does not say is when was this figure of $2,500/tone prepared? For which project was it?.

    What I know is that you can’t use one figure of say $2500 across all projects for a break even.

    Sometimes I think we really need people who know the subject to head relevant ministries.

    • Last year’s breakeven is not the same this year. Yaluma, like any ignoramus, assumes costs are static over long periods while prices fluctuate daily. Not true. Mining equipment and supplies jumped up in real terms as demand picked up in line with copper prices. The challenge now is that those costs no longer match the much reduced copper prices. Go figure.

  4. What would these empty tins understand about cost saving when the lazy Bum Edgar with his entourage is here in Europe on earning allowances and shopping …you simply cannot explain to them…just ignore them.

  5. Too late Yaluma. We gave you the benefit of double but you looked to the other side. You antagonised everyone and so all the explanations do not make sense any more. Just come down son and never to ascend to the mountain top of leadership.. try leading you family…..
    We are sorry but we told you….

  6. This is a total manifestation of failure on your behalf Yaluma and the entire PF cabinet. What you are telling us here is what should have been your ground of negotiating with mines to make them keep our brothers and sisters in jobs! Making noise like this at conferences will not bring back our relatives to jobs because you needed rigorous engagements with mining companies on a continuous basis! If you failed to tax them when they made super profits,is that their fault? Did you put in their development agreements or investment plans that they had save profits to keep workers in hard times? Once a worker is paid retrenchment benefits,it becomes a responsibility of government to care for them that why govts.are proactive to prevent job losses.Even investment in power generation was easier…

    • …continue .. Even investment in power generation was easier when Mines made high profit and that was a time this conversation could have had good results. Now it is a hard sell!! You are such a dissappointment!!

    • …continue .. Even investment in power generation was easier when Mines made high profit and that was a time this conversation could have had good results. Now it is a hard sell!! You are such a disappointment!!

    • What I can not understand is why the Ministry of Mines can not keep track of figures on mineral resources (measured, indicated and inferred) depletion rates, production projections etc for all the mining operations in the country. It is mandatory for each mine owner to submit these returns to the ministry, including future development projects. All the ministry requires to do is to assign a dedicated Minerals Development Engineers to audit/verify specific operations on a regular basis. Mines produce production numbers on a shift/daily/weekly/monthly/quarterly and annual basis and; cost reports at least monthly and and projections for 1,3 and 5 years. WHY SHOULD THIS INFORMATION BE MADE AVAILABLE NOW? Because that is when the “Office” Mining Engineers at the Ministry looked at the data…

    • looked at the data to prepare a Paper for presentation at a CONFERENCE!! and more ALLOWANCES. Sadly, jobs have already been lost and the money taken out of the Country.

  7. PF, whether its President or Ministers, always whine like they are not running govt. What is the point of negotiating with mines through press releases? Why are PF afraid of talking to the other participants whether in the economy or politics? This shows lack of understanding of the real issues on the ground and trying to resort to arm-twisting.

  8. So ZESCO has been selling electricity at a loss?? Didn’t the president reverse the increases last month which would have made the tariffs cost reflective?

  9. God gave us intelligent brains for a reason. PF are yet to learn to use their brains to solve problems plaguing the country.

  10. And some buggers will vomit their rubbish here in support such nonsensical and useless Government of vision less Chagwa Lungu. Were you sleeping or drunk when miners were losing jobs. You were busy crying wolf ati it is global, what is global about your fo.olishness.

  11. Mean while PF NINSALAFYE…… Yakuma is confused he knows its low power supply that lead to mines retrenching workers ……..VIVA SAMPA VIVA

  12. What is $2500 historical breakeven flexed to current prices?

    That new figure which takes into.account lower production volumes to sustain even higher fixed costs is the figure Yaluma should be talking about!

    Any management accountants in GRZ?

  13. I have attended this indana before and the composition of the delegation is empty headed by an empty shell,Yaluma. They will not understand a thing.

  14. I am strong supporter of PF. Edgar, is good leader, humility, good listener, tried and tested, battle hardened, I am impressed with his courage, a true commander even by military standards. Even Mr Sata would be impressed for choosing Edgar to succeed him and not all those kawayawayas. what more can a country ask from God?
    But this yaluma is a liability in such a large and important sector. Hopefully he will be given a smaller ministry on 15 August when Edgar picks next cabinet :))))

  15. This clueless,visionless,brainless and useless person where was he all this time when the mines was laying off workers.

  16. Ati “we should go back to the ZCCM days”??? Really it’s painful to see such… Will the next statement be “we should go back to the Welensky days”? Or “we should give Zambia to Pope Francis as his own farm because we don’t know what we are doing”

  17. …what more evidence do we need to prove that generally Africans do not see beyond two years….when we were connecting the mines to the main national power grid, no one then (the cabinet with the likes of the Chikwandas) thought that 30yrs later consumption will treble….the mines should have maintained their own power supply and we would have been in this mess with or without sufficient water in the Kariba Dam…
    …we cannot talk of lowest tariffs in the region without talking about lowest salaries in the region….compare what a Nurse, a teacher, Engineer gets in Zambia and Botswana, SA or Namibia….

  18. Well, it’s not just the mines that wants you completely useless chaps out of power. Look at God, he has stopped the rains from falling and the Kariba is drying out causing all sorts of power cuts in the country. Uno mwaka kunya bebele ba mambala imwe!

  19. Ba yaluma, break even is dynamic depending on the prevailing conditions. The break even today stands at $2.50/pound not $2500/ton. It’s also different from mine to mine which takes into consideration the depleting head grades in their ore body. simple example, k250 000 would buy a brand new utility vehicle 2.5 yrs ago, today you need atleast K600 000. dont talk about budgets in dollars you know what you did with the statutory instruments which were quickly reversed. incosistent policies really put a lot of stress on these mines. glencore took advantage of the dead kwacha to pay off the outstanding wage bill for retrenched miners.
    most of these indabas are attended by wrong professionals who dont understand a thing about mineral economics.

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