Saturday, June 15, 2024

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

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Some of Mopani Workers
Some of Mopani Workers

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.”

46 COMMENTS

    • That’s why I did CIMA, ACCA, Bsc, MSc, MBA, BA, and completed my PhD recently. It’s because people of my kind will always have a job and make more money than those of lesser education.

      Job cuts only worry the less elite.

      Thanks

      BB2014,2016

    • Ka mushota ati “we the elite”
      Surely brings a whole new meaning to the word “Elite”, which we all know ka Mugshot is an ‘ Elite H00ker on U.K streets.
      Your behaviour never shows class ka elite from Chiwrmpala iwe Ka k0.lw3!!

    • They are trying to armtwist government into changing the new mining tax regime. This is where PF need to be strong and not flinch. Take some other potential investors to tour the mines that mopani runs, so that they understand that we have options. I think it’s time for Glencore to exit Zambia. they are a big headache

    • The case of Mushota suits the adage “you can take someone out of the ghetto, but you cannot get the ghetto out of them” very well

    • @logic
      Hope alone is not enough, it’s better to use a condom that to have unprotected sex and hope you don’t get aids,,, that principle applies to everything in life,,,

    • Back to the Chess board…Mopani knows that our dull leaders will come running with a blank cheque book and host under table meetings sign agreements. …they have played this game with these empty tins!!

    • Its fine let Mopani be closed if anything, but time for free Electricity tariffs and VAT refunds are gone. If people are paying taxes why not the mines.
      I support GRZ on this one.

      But I am just waiting to see the 500k jobs that ECL promised will be created.

  1. And here comes the same old story

    They dont even mention their unhsppiness with the new mineral royalty tax which is their true gripe… and the blackmail of job losses has started !

    How many times have we seen this movie before ?

  2. The arm twisting begins. Looks like the new taxing system has cornered them. No freebies this time-ZESCO tariffs cost reflective, no VAT refunds; And with the talk of nationalizing failing mines, it has them in a tight spot.

  3. It’s about time Mopani submitted their exit plan, arm twisting tactics won’t take them anywhere. Since Mopani began operations in Zambia they’ve never declared any profits, but which business can operate at a loss for this long? It doesn’t make sense. Instead of concentrating on debating the Budget, Parliament must move quickly and pass a Law to make it illegal to place any mine on care and maintenance. For those who’ll be caught up in the flare, please understand that there’s life outside a salaried job

  4. Where is that one who says that GRZ can run the mines? This is a complex industry citizens. Leave the mines to the whites and lets just stick to our local politics.

    • What type of an engineer are you? In your head only a white person can run a mine…………….shame. You are SCHOOLED not Learned !!

    • Mining Engineer you are a block head. GRZ operated the mines for over 20 years and the country benefited. You leak too much white ass

    • What complex? Do you know that even today the people running the mines are Zambians or you don’t know? We’re geologists, rock mechenics, met engineers, vent engineers mention it we are there. All we don’t have is ownership of the mines. For your information we were in charge of ZCCM but unfortunately the commodity prices and Kaundas support for liberation affected us adversely. The MMD were wrongly convinced that the mines would be more viable in private hands. These private hands didn’t include Zambians. …remember Kafue Consortium was rejected. ..But the same excuses that dodged ZCCM are still around, low copper price, high cost of production etc. We were taken for a ride.

  5. This again!!!!!!!! Only few months ago we were told they want to cut but where are we going with this and the only true sufferer is an ordinary miner who is trying to make ends meet to educating children.. Bwafya!!!

  6. The mischief by the mines knows no boundaries.They are incorrigible.They will always lecture us onhow expensive it is to run mines and won’t tell us how much they are raking in as profit.It is for this reason that the deployment of electronic fiscal devices proposed in the 2019 national budget(point 35) to capture business transactions in real-time must begin with the mines to ensure transparency and accountability at the mines because figures will be double checked at point of source(at the mines) and at points of exit ( at the borders) synchronously.This will curb cheating or faking production figures.

  7. THESE MINE OWNERS HAVE WICKED HEARTS!!
    They always moan about ZERO PROFITS, when we are all aware a small enclave of Switzerland has become one of the WEALTHIEST PLACES TO LIVE due to Fraud /Not declaring profits, thereby depriving Zambian’s, & making Europe Rich, whilst leaving a trail of pollution poverty, misery, desperation, in the land where they extract the wealth from.
    WHAT KIND OF GREED IS THIS?? They should vacate our Zambian mines, if theres no profit to be made, ba Mambala!

  8. Not too long ago Glencore, a trading company of Mopani Copper Mines based in Switzerland was sued by concerned citizens of that country, and legal battle rages on, for underdeclaring copper profits, there by depriving the Zambian govt of much needed revenue. Today mwatampa ukuilishanya over costs. Tell us also the revenue side of your business. This is where we expect Zambian top accountants, whom we know at Mopani to be more patriotic an tell the shareholders to be truthful.

  9. THESE CROOKS!! How can they claim that INVESTORS HAVE CONFIDENCE while at the same time claim to MAKING LOSSES?! HOW CAN SHAREHOLDERS CONTINUE TO INVEST IF THE COMPANY HAS BEEN MAKING LOSSES?! The MAIN PROBLEM WE HAVE IS A CLUELESS GOVT and OPPOSITION WITH NO LONG TERM PERSPECTIVE OF HOW TO RUN THE MINES AND THE ECONOMY;they are both pre-occupied with positions than service to the nation. IT APPEARS MINES HAVE BECOME USED TO BEING SUBSIDIZED BY ZAMBIANS AND WANT THE GAME TO CONTINUE!! DRC, with a less attractive investment climate increased taxes recently and had earlier chased FQM for this type of behaviour!! Even with that, many mining houses are fighting to invest in DRC!! WE NEED STRONG LEADERSHIP TO REDIFINE HOW WE RUN THE MINES, GOVT MUST HAVE A MORE PRONOUNCED ROLE IN THE ENTIRE…

  10. We have been there before. Each time government tries to get something from the mines, job loss is used as a weapon by the mine owners. DRC may be in shambles but when it comes to mining benefits for the country, Kabila doesn’t back down. But here it’s the opposite with every Jim and Betty jumping on the side of the investor.

    • @13Ndanje..SPOT ON! That is why IT IS HARD TO TRUST SOME LEADERS IN OPPOSITION, eloquent as they may sound!! THEY ARE IN POCKETS OF MINING HOUSE, I RECALL HOW THEY OPPOSED THE SIs 32 and 55 which were aimed making Mines more accountable and bring more forex in the country. I remember how they opposed the increase in Mineral Royalty tax in 2015, siding with mines so that they could be perceived investor friendly by their financiers- VERY UNPATRIOTIC!!

  11. Zambia has been subsiding the mining industry for too long with nothing to show for it. Surely we cannot continue being held at ransom regarding our wasting assets on the pretext of providing employment for our people, with slave wages. I’d rather we suspend all mining operations maybe perhaps our children can come and manage them better.

  12. cost of production is too much, industries cannot survive in such an environment. the problem with this government is that they want quick money. if copper price drops on LME, subsidies on power and fuel is necessary. the idea of subsides is to encourage growth of local industry and increase output and earn more forex.

    • Tell me when and where cost of production has been “favorable ” to these investors? I worked in a strategic office where we the cost per meter drilled, meter blasted, ore hauled etc and I can tell there’s always been a comfortable profit margin. These guys try everything in order to maximize on profit. Unfortunately our people both working for the mines and relevant government departments will always assist them in avoiding payment of taxes and other fees. All they do is make one Zambian either General Manager or Chairman, give him all incentives and make him feel irreplaceable, and the guy will ensure everything goes right for his company.

  13. Dununa Reverse at work, these same miners when given opportunity to vote for change they vote for the same thing. Now they will be dumped after being used for votes. The economy now is not very good and some people are assuming that some investor is going to risk their money in our bad economy, absolutely no.

    • That’s your problem. Instead of looking at the problem as a Zambian, you want to campaign for someone. The mining companies have been behaving like this ever since they bought the mines. If DRC which is at war can manage to benefit from the mines why can’t we? In case you doubt just to the Congo and see how bazungu are treated but they are still there.

    • @18 China, if you think this is a laughing a matter, TRY WHERE YOU ARE IN THE US TO CHEAT ON TAXES! These mining companies have been cheating on taxes,never wanted to pay right taxes and want to continue being subsidized by Zambian people as they consume cheap electricity! Be patriotic and see sense in compelling these companies to pay the right taxes! This is NOT ABOUT WHICH PARTY ONE SUPPORTS. In DRC, unpopular as Kabila is when he revised taxes on minerals NO BODY, INCLUDING HIS ARCH ENEMIES OPPOSED HIM, in ZAMBIA, BCOZ OF SHALLOW OPPOSITION LEADERSHIP,SOME OPPOSITION PARTIES AND THEIR SUPPORTERS SUPPORT ANYTHING THAT WORKS AGAINST THOSE IN POWER EVEN WHEN IT SPELLS RUIN FOR THE COUNTRY!

  14. Please lay them off Mopani
    I am pleading on their behalf. Please please. That is the only way they will learn to vote wisely.

    • So it’s true your party is working with these people? They can go but they won’t take our copper. You have just exposed yourself. Voting has nothing to do with this. So trying to get what rightly belongs to us is a crime in your warped thinking?

  15. Ba fake mining engineer, where were you when Zambians were running these mines? IMF pushed us in very tight corner. They put a condition on Zambia that unless we pravatise the mines no bail out for Zambia at that time, but times have changed. Let us repossess these mines. We have alot of experienced engineers to run the mines we have done it before, we can do it again. Stop depending on foreigners to develop our country. They won’t do it, we have to it ourselves.

  16. This was to be expected. When you squeeze them they squeeze back. You don’t expect them to lie idle doing nothing. If only the population were like the mines then government would not squeeze us too.

  17. “Management has since decided to close down its Lusaka office and move all the functions to Kitwe.”
    Just because they are white does not mean they are smarter than you. Always remember this. Why was there Lusaka office even open? What needs done is lowering of salaries by the corporate. They get paid way too much.

  18. I am a believer in a laisser faire free market economy, but it’s these arm-twisting tactics of these mining companies that may make me agree with Lubinda Haabazoka’s advocacy of the nationalization of the mines. It has now become a mantra after every budget speech for the mining companies to threaten us with withdrawal of investments, job cuts, etc. There has never been a budget which these companies have ever found favourable with their operations. We have generations of highly experienced Zambian mining experts who served in senior capacities in these mines. Why don’t they form a consortium of experts, form a Zambian mining company and attract equity partner(s) to take over these mines in the event that these blackmailers actually withdrew their investments?

  19. Reality is whether arm twisting or nose diving by Mopani,govt also has no idea about running our economy.Am convinced that no matter how much tax Mopani or KCM pay there is no guarantee that our economy will be fine.If you visited Mopani you will appreciate the investment they have done.Its world class.None of its kind.Yes it is accepted that these guys use crooked means to get what they want but be rest assured, its investment going for 30years.Investor problems are minor.Look at how much land we have lost to Chinese? Is the problem of Chinese? NO! Who’s? So even if Mining investors ,gave us all the dollars,no guarantee with the way we running things.

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