Mopani to cut jobs as busi­ness con­di­tions be­come chal­leng­ing

Zambian Business Times - - MINING -

Man­age­ment at Glen­core sub­sidiary, Mopani Cop­per Mines – MCM says job losses are in­evitable as the cur­rent busi­ness en­vi­ron­ment has be­come chal­leng­ing. In a staff memo dated Septem­ber 28th 2018 seen by the Zam­bian Busi­ness Times – ZBT, 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 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 pointed 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 USD4- bil­lion dol­lars was 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.”

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