260 workers lose jobs at KCM

260 workers lose jobs at KCM
Written by Mutuna Chanda and Speedwell Mupuchi in Kitwe
Monday, November 10, 2008 11:19:38 PM

TWO hundred and fifty nine Atlas Copco workers at Konkola Copper Mines (KCM)
have lost their jobs following the termination of their contracts by the mine.

Meanwhile, Mopani Copper Mine has immediately effected review of its manning levels of its labour and has asked contractors to reduce their labour by 30 per cent in a bid to reduce costs.

The current global financial meltdown coupled with low production levels in Zambia’s major mining firms has forced the firms to start thinking of measures to mitigate the impact.

The imminent loss of employment at Atlas Corpco comes after KCM terminated the Maintenance and Repair Contract (MARC) worth at least US$1.2 million monthly that it held with Atlas Copco.

The ghosts of the global financial crisis and the fall in copper prices are already haunting Zambia’s Copperbelt Province with job losses.

Among those losing their jobs are artisans in heavy equipment repair, power and auto electricians, boiler makers, stores personnel, site administrators and other administrative staff.

Those whose jobs are on the line total 300, some of whom are deployed at KCM’s shaft number one and three at Konkola mine while 41 of them are being retained by Atlas Copco.

In letters declaring workers redundant, Atlas Copco human resources manager Mike Mwanangombe stated that the KCM-Atlas Copco MARC contract was terminated and that its last day was October 31, 2008.

“Due to this development we wish to advise that management after failing to secure alternative employment for you both within KCM and within the company, it has been decided to declare you redundant,” Mwanangombe stated. “Accordingly, you are given one month’s notice with effect from 1st November 2008. Therefore, your last shift with the company will be 30th November, 2008. However, should your final pay not be paid to you by the end of your notice period, you will continue to report for work and the company will continue to pay you your normal salary until such a time that the redundancy benefits are fully paid to you.”

KCM in a recent management brief warned of job losses owing to the slump in copper prices.

KCM stated that it would have to cut on costs and improve on its production for the company to stay afloat.

Well-placed sources in KCM have said the mining giant plans to do away with more than 50 per cent of contractors that it has engaged while those who are employed on contract at the company could also lose their jobs.

And Mine Suppliers and Contractors Association president Fanwell Banda expressed fear over the threat that the fall in copper prices posed to members of his grouping.

Contractors are mainly engaged by mining companies to provide labour or particular services as per stipulated contract while suppliers provide specific materials that are needed by the industry.

Banda said local suppliers were bound to be most affected by the mining companies’ decision to cut on costs.

“I can confirm to you that what is happening already is that KCM is calling suppliers to reduce on negotiated contracts for which the suppliers have already spent money on and are just waiting for payment,” Banda said. “If the mining companies go flat out in reducing on the costs, what will happen is that the mines will turn to the cheapest sources of getting their materials and since we are not a manufacturing country, they are likely to turn to foreign companies or countries to get their supplies in the production process and since there is no law that prohibits such practices or protects local companies from being denied business in preference for a foreign company, local companies will be wiped out. The supply base on the Copperbelt will be eroded.”

Banda urged the government to put in place protectionist policies that would prevent mining companies from sidelining local companies in the face of the financial crisis.

He said if local companies were not protected, foreign firms would land most of the business while local companies would be defunct leading to loss of employment among many Zambians and in turn misery on native families.

“Even a strong economy like South Africa has policies to protect local business so why can’t we do it as Zambia?” wondered Banda.

And National Union of Miners and Allied Workers (NUMAW) president Mundia Sikufele said his union had asked the mines to get back to the drawing table to see how they could cut on costs without pruning workers.

“We are in discussion with them [mines] to see how they can avert the situation,” Sikufele said. “We are saying, ‘hold it, let’s see how we can share the little there is without touching our members’.”

He said most of the miners were still in employment and that the mines would get back to NUMAW on what they would decide after assessing the situation.

“Our members are still intact, they are still in employment but when the time comes in for us to throw in the towel then we will say so but for now we can’t let our members be out of employment,” said Sikufele.

And according to a management brief to workers and their labour representatives on Thursday, November 6, 2008 and obtained by The Post, Mopani Copper Mines (MCM) stated that the turbulent financial markets had affected commodity prices on stock markets.

It also indicated that prices of base metals such as copper had equally been affected as they had been falling on the world market due to decline in demand on the international market.

It stated that copper prices had fallen from above US$8000 per tonne to below US$4000 per tonne compared to their unit cost of production at US $5,500 per tonne.

“We are making a loss of US $700 per tonne,” read the brief. “This state of affairs has been exacerbated by the unfavourable production performance thereby adversely affecting Mopani’s financial position. The Mopani finished copper production year to date is 76,698 tonnes against a budget of 155,120 tonnes, which is an average monthly production of 8,522 tonnes against 17,236 budgeted tonnes. Mopani production is therefore 50 per cent below budget.”

According to management, as at end of September 2008, Mopani’s cumulative year to date loss was US$78.8 million against a budgeted profit of US$213.3 million.

“The company management is now required to undertake serious cost reduction measures in order to improve its financial performance and to conserve cash to mitigate the falling metal prices,” read the management brief.

The company management directed immediate implementation of “survival measures” like ensuring sustained production of a minimum of 12,000 tonnes of finished copper per month, which translates into an improvement in productivity of every employee by at least 20 per cent.

The Mopani management has also resolved to reduce costs through review of each production area to determine on-going viability, reduce capital expenditure by 60 per cent for the remainder of the year, strict control of material usage and control of fuel consumption.

Among other measures to reduce costs include reduction in the scope of work for contractors by 40 per cent, reduction in contractors’ labour by 30 per cent, suspend labour hire contracts and recruitment, reviewing manning levels of Mopani labour and suspending overtime.

“Contractors have already been directed to reduce their scope of work by 40 per cent and their labour force by 30 per cent,” read the brief. “All employees are urged to submit suggestions to their heads of department on cost reduction and productivity improvements.”

According to the brief, Mopani was a high cost mine and must therefore reduce production costs by 25 per cent in order to remain competitive.

It also indicated that Mopani would only survive decline in copper prices if it implemented serious cost saving measures that all employees “must embrace”.

According to the brief, Mopani management also proposed to reduce capital expenditure by 60 per cent for the remainder of the year.

The brief was however not clear on whether or not there would be redundancies as a consequence of review of manning levels at Mopani by stating: “As soon as the review of manning levels is completed, the resultant decision will be communicated to all concerned in line with company rules and procedures.”

A source within Mopani suggested that the company could do away with the large number of expatriates who were a drain on company resources.

“From our experience, we can do without them [expatriates], we can run without them. They add no value to the equation,” the source said.

The source also complained that they were paid a tenth of what expatriate workers were paid.