Mopani copper mine has proposed to Government to put the mines in Kitwe and Mufulira under care and maintenance.
Mines Minister Richard Musukwa announced during a news briefing that he was informed by the Glencore Executive Director that the two mines are be put on care and maintenance for effective today, Tuesday 7th April 2020 for three months.
Mr Musukwa said Mopani is citing the global economic challenges which have led to the price of copper falling to about 4,800 dollars per tonne and the disruption to international mobility due to the Covid-19 out break.
But Mr Musukwa announced that government has refused to grant Mopani mine placement under care and maintenance.
He said the plan has been rejected because the reasons forwarded by Mopani are not adequate and lack merit.
The Mines Minister said plans by Mopani Copper Mine to place its two mines on care and maintenance were unacceptable and unjustified.
Mr. Musukwa said the reasons advanced by Mopani Copper Mine to place the mines on care and maintenance fail far beyond the provisions of the law.
Below is the full statement
Mopani Copper Mine (MCM) contacted the Ministry Last week on Wednesday requesting to have a video conference with the Minister.
Yesterday on Monday 6th April 2020 at 14hrs we held a video conference involving Glencore Head of Copper Africa Mark Davies, Nathan Bullock CEO Mopani Copper Mine (MCM) with Myself and our respective technocrats.
The Glencore Executive Director informed me that the Company was going on ‘Care and Maintenance’ from Tuesday 7th April 2020 for 3 months citing 2 reasons namely the global economic challenges which have led to the price of copper falling to about US$4,800 per Tonne and disruptions to international mobility. Another reason cited was the challenge of COVID 19 in terms of putting projects on hold until key personnel can travel to the mining sites.
Mark Davies informed the meeting that some personnel in Management would be laid off while unionized workers would obtain their salaries for the 3 months from today the 7th of April 2020, after which the situation would be up for review. A further indication was made that an ex-gratia payment of one month’s salary would be made to unionized staff employed by contractors in addition to some severance package. Later in the afternoon, after the meeting an electronic copy of a letter dated 6th April 2020 addressed to the Director of Mines and copied to my office was emailed by MCM.
The letter claims that the company had taken the action pursuant to section 37(1)(d) of the Mines and Minerals Development Act which provides for closure of a mine based on Force Majeure. For avoidance of doubt, 37 (1) of the Mines and Minerals Act cited by MCM states:
“Subject to the other provisions of this section, a holder of a mining licence or mineral processing licence may suspend or curtail production of a mine for any of the following reasons:
(a) the maintenance, installation or de-commissioning of equipment;
(b) an unsafe working environment;
(c) uncontrolled pollution of the area resulting from the mining operations;
(d) Force Majeure; or
(e) a labour dispute that disrupts the mining operations”
The Ministry has studied both the letter from MCM and the oral submissions during the Video conference submission and wish to react as follows:
1. The Government of the Republic of Zambia Rejects this attempt by Mopani to put the Mines in Kitwe and Mufulira on CARE AND MAINTENANCE because it does not conform with the Law. The reason cited of Force Majeure is defined in the Law as:
“FORCE MAJEURE ” means an event which is beyond the reasonable control of a Licence holder and which makes the exploration or mining operations under the licence impossible”
The Ministry is not aware of any event that has happened that is beyond the reasonable control of MCM and which makes mining impossible.
Force Majeure relates to an event that can best be described as “AN ACT OF GOD” which clearly is beyond the control of an employer but in this case no explanation equivalent to “An act of God has been availed”.
2. The letter from MCM and the video conferencing failed to provide clear evidence of what has happened that would trigger MCM citing Force Majeure. Fluctuations to the copper price are a constant in the mining sector and cannot reasonably be classified as “Events” beyond the control of the company. The price of copper per Tonne has been fluctuating for many years. MCM came to Zambia in the year 2000. Between the year 2000 and today, the price of Copper has fluctuated from as low as US$2000 to US$9900 per Tonne. It is therefore surprising that the price of Copper can be cited as one of the reasons necessitating the need to claim ‘Force majeure’ because the current price is about US$4,800 per Tonne. This Price is not as low as some years when it was as low as US$2000 per Tonne. It is therefore shocking that this circumstance of copper being at US$4,800 Per Tonne can reasonably be considered as beyond the control of MCM, which had weathered worse price fluctuations in the past. This is clearly not ‘AN ACT OF GOD” but a normal business trend.
3. MCM claims in their letter that two weeks ago they began a comprehensive review of the business against the backdrop of an extremely challenging environment impacted by the COVID
19. Zambia as a jurisdiction registered its first two cases of COVID 19 on 16th March 2020. The timing of COVID 19 in relation to the analysis by MCM reveals that none of the COVID 19 developments in Zambia could realistically be said to have specifically impacted MCM to trigger Force Majeure. The measures taken by government to mitigate the effects of COVID 19 have hitherto not been a lock down but steps to allow commerce to continue in the country, especially the mining sector. At no point has MCM specifically raised concerns of specific goods or services being withheld that are critical for their operations. This reason therefore came as a complete surprise to the Ministry.
4. The Minister of Finance specifically took measures to mitigate the impact of COVID on the Mining Houses and the measures include:
a. Removal of provisions of SI No. 90 relating to claim of VAT on imported spare parts, Lubricants and Stationery to ease pressure on companies;
b. Suspension of Export Duties on export of concentrates in the mining sector to ease pressure on the sector and
c. Suspension of Export Duty on precious metals.
5. Last week, Mopani specifically requested to have a video conference call in the light of COVID and at no time were the issues of disruptions to international mobility raised, it’s therefore shocking that again MCM can claim these reasons amount to FORCE MAJEURE.
6. Government is aware that MCM has been attempting without success to change various aspects of their business model including the Procurement system which the Ministry challenged as not conforming with section 20 of the Mines and Minerals Development Act on giving preference to Zambians on the supply of goods and services. The government cannot therefore accept an attempt to use the COVID 19 pandemic as a scapegoat to push an agenda to lay off people without lawful reasons and circumvent the law to achieve an end.
7. The proposal by MCM is further rejected because for a mine to be put on care and maintenance, there are processes required to ensure that Mine Safety, Environmental concerns and the welfare of miners are secured. An event which reasonably can be classified as Force majeure such as a collapse of a mine or sudden flooding of the Mine after an earth quake does not present time to plan what the way forward would be. In this situation however MCM has had the time to analyse what they call a business review process that is clear on the goal but weak on the process to be undertaken.
8. Whereas the MCM letter claims that no retrenchments will be made, it categorically says some management employees will be laid off while severance packages will be granted to unionized workers under contractors. This again points to the long outstanding issue of attempting to cut off the current suppliers of goods and services in preference for a model that disadvantages Zambians. We are on record and I wish to reiterate that we shall not allow the exploitation of Zambian contractors because our law is very clear that preference must be given to Zambian providers of goods and services.
9. As Minister responsible for Mines and Minerals Development, I wish to assure first the Workers of MCM that your government will not let you down and allow MCM to circumvent the law to favour their interests. We are a pro-poor government who were elected to ensure that Zambian workers are protected and where there is justification we will allow the laying off of people but not in this situation where we clearly have MCM fishing for reasons to lay people off. This situation does not amount to Force Majeure and we believe it’s possible and allowed by the law to lay off people using the right procedure where a company engages the Unions, the contractual workers and the Government in a constructive manner.
10. I have further rejected an attempt to give government less than 24hrs notice to effectively lay off more than 11,000 workers and put a mine on Care and Maintenance. We shall further engage MCM to be more forthright and engage in genuine dialogue to look into the plight of workers and the life of the Mines in Kitwe and Mufulira respectively. There is no Force Majeure that can reasonably be seen by any reasonable person analyzing the sector. Where an Act of God or Force majeure occurs, it tends to be so clear everyone would agree that a situation has so presented itself but in this instance we do not agree as Government that Force majeure has been triggered that can justify waiving workers rights, Environmental concerns and Mine Safety. My office shall keep you updated of the developments as we continue to discuss with MCM.
I thank you
Hon. Richard Musukwa, MP
Minister of Mines and Minerals Development
7th April 2020
Excellent. Companies cannot just choose when to come and leave as they please. When they are fighting for permits some of them even kneel on floor. Today you want to run away and leave our people stranded ? Well done minister for standing up for our people. Pf is a party that puts the common man first. We leave elites for upnd to help
When the going gets tough the tough get going
This is a difficult one ba Minister. I wish you could understand the business environment at the moment.Yes you may reject their request but operations at the moment are just unsustainable. The dollar is at running to 20 and sooner ERB will announce a price hike on fuel. To meet the social distancing, the buses are carrying fewer people to and from work. Meaning bussing trips have doubled. Even the cage that takes miners underground is now taking fewer miners per run. All bulk transport operations have been impacted. You know Sir truckers iosolated at either Kazungula or UNZA with some destined to bring vital components to the Mines. It is tough!!! and I think is force majure.
Business is business guys. Mopani is not a charity. In my business plan, EVERY COPPER MINE SHOULD CLOSE DOWN AT A COPPER PRICE BELOW $5,200/tonne
wonder shall never endooooooo
This from a minister whose govt owes the mine! Do u see wht profligacy leads to?
Of course people who have never run a business will shout loudest…you think investors like Glencore come to the country to spoonfeed you they come for profit full stop…this is why you need to make fairer tax policies for all stakeholders come rain or shine. This school teacher Richard Musukwa can shout all he wants nothing will happen unless you go back with more incentives as you are dumb …am even surprised you still have the likes of Glencore in Zambia.
The depreciation of the Kwacha is an advantage in many ways to these mines because they price the copper in USD and pay taxes in ZMW and a lot of zambian suppliers and contractors including the buses they have hired. Convic 19 is not here to stay, soon this will pass and the cost of reopening the mine which is put on care and maintenance will catch up with them. Someone should do his or her math well
This one is not fit to be in charge of mines! He has no clue on how mines operate. Mopane has a solid case and should be appreciated for approaching Government on this.
Do you them to pull the plug without notice the way Anglo did?
Mr Minister, sit down again with Mine experts and work out a win-win way forward! Playing to the gallery is counterproductive!
Some businesses have been ordered to close, in some cases extra costs have to be incurred , movement of material , human and other resources have been restricted and in some cases totally curtailed. All by government decree. If this is not FORCE MAJURE to business, then what is it?
Richard is just talking politics, Mopani is a stubborn investor they’ll do as they wish. Last he said they won’t prune any worker but they went ahead and laid off many employees. It’s annoying for a Minister to pretend to be in charge when he’s not.
11,000 jobs!!!! Are we going back to the days of the privatisation programme! Zambia is in deep trouble.
BULULU – Even if its priced in dollars the price of copper on LUSE has fallen either way its affects their bottom-line, you should have kicked these briefcase merchants long ago. While we are still on price of commodities …why dont you ask Richard why the price of fuel at the pump in Zambia has not been reduced when Crude oil is at an all time low….is that acceptable??
This is the problem when you are so reliant on forigne mines……you look like deranged beggars in your own country.
From 3 years ago , we are on record begging PF GRZ to establish a solar power manufacturing industry.
By now thousands of our people would be employed to fill local demand and demand to neighbouring countries.
Most of small scale bussiness would have had solar power and most of our forests would have been intact from malasha……
Bati nzelu ba PF ni zero mu scopo….
They are just scared that with elections coming next year such job losses will put their chances of retaining power at a big fat zero hence trying by all means not to close the mines.
Well to shut down.People out of work.It is elementary.Peter Carlos Hinds.
Pay a hangman?”The Bible says a laborer is worthy of hire”.Peter Carlos Hinds.
@Tarino Orange: Note that the current Copper prices on LME is not the actual price Copper is sold. These mines have contract prices and the current prices may just affect their negotiating power when they sign contracts in the future. What they should do not just put their policy demand on the table than go for the last resort of threatening to close the mine. In regard to the price of fuel, We expected this to come down even before the Kwacha depreciated to these levels.
But meanwhile Barrick Joins Fight Against Covid-19 in Zambia
Lusaka, Zambia – April 7, 2020 – Barrick Gold Corporation’s country manager for Zambia, Nathan Chishimba, today handed a cheque for US$530,000 to Minister of Health Hon Dr Chitalu Chilufya, Minister of Mines & Mineral Development Hon Richard Musukwa and Provincial Minister Hon Nathaniel Mubukwanu. The donation is designed to support the country in combating and containing the Covid-19 pandemic.
At the ceremony, Chishimba said Barrick had already introduced extensive measures to protect workers and their families living in and around its Lumwana mine against the virus.
“As a committed partner to Zambia we would also like to make a contribution to the government’s fight against the pandemic. We are consequently funding…
But meanwhile from serious companies, Barrick Joins Fight Against Covid-19 in Zambia
Lusaka, Zambia – April 7, 2020 – Barrick Gold Corporation’s country manager for Zambia, Nathan Chishimba, today handed a cheque for US$530,000 to Minister of Health Hon Dr Chitalu Chilufya, Minister of Mines & Mineral Development Hon Richard Musukwa and Provincial Minister Hon Nathaniel Mubukwanu. The donation is designed to support the country in combating and containing the Covid-19 pandemic.
At the ceremony, Chishimba said Barrick had already introduced extensive measures to protect workers and their families living in and around its Lumwana mine against the virus.
“As a committed partner to Zambia we would also like to make a contribution to the government’s fight against the pandemic. We are…
BULULU – Not all them maybe FQM, Glencore they are more sophisticated …how do you contract price when you are transfer pricing at the same time to cook the books? Either way if you operate on future earnings such news still affects your bottom-line….you have to mitigate the risk as soon as possible.
Well one can only feel for those about to lose their jobs because history tells no govt intervention has ever worked if the mines want to lay off people in the PF govt. Govt can say all they want but still it will concede at the end.
I support the minister 100%. Anglo are desperate to return to Zambia. Govt should do the KCM thing on Glencore and resell the mine to Anglo. We should not tolerate these *****s to play some monkey tricks on our economy.
@Rat race: that’s an idea. We can renegotiate better conditions with Anglo.
Mopani has have never failed its wish.
History has it.
Just watch and observe how the PF will incompetently handle this matter. Mind you we still have KCM liquidation with us, same government that cares for the less privileged.
Just watch and observe how the PF will incompetently handle this matter. Mind you we still have KCM liquidation with us,
How about Lubinda Haanjoka,
Infestors are selfish goons.
H² made a mistake selling our mines, I tell you .
Its like the desire to remove PF out of government blinds possibly intelligent people and causes them to make unintelligent comments. Any sincere person would not agree with Mopani except if they produced evidence of price contracts they signed with their customers. Whilst in Switzerland they are standing with their government financially here where they get minerals from they are complaining of difficulties. Its strange to see Zambians supporting this kind of behaviour. Imagine its your preferred candidate in state house and you have an investor who takes every opportunity of economic challenges to abuse you. When will Mopani appreciate Zambia for the business opportunities given to them?
Ubuteko bwesu kuwayawaya fye
This is time to take care of each other. Money can be earned some other time.
Industries and businesses are the backbone of economy. Millions of families depend on them for livelihood. While the workers and laborers slog it out, the owners make huge profits. Industrialists have been making profit all these years, and no one had any objection to it. But it is depressing to know some are using the pandemic to save money and destroy lives of thousands of workers and laborers. Mopani mines is one of them. The greed has driven the decision to close the mine in the name of repair and up-gradation. This is utterly inhuman. The management should be considerate about the poor laborers who have given their sweat and blood to grow your business.
Grizzley Mining Company has set an example for all…