60% drop in nickel prices necessitated restructuring at Munali – Albidon

60% drop in nickel prices necessitated restructuring at Munali – Albidon
Written by Joan Chirwa
Monday, December 08, 2008 11:44:21 PM

ALBIDON Zambia Limited has said the 60 per cent drop in nickel prices in the last nine months necessitated its restructuring process at Munali Nickel Project, leading to job cuts of 53 workers.

The company, a 100 per cent shareholding of Albidon Mine of Australia, stated that it was inevitable for the company to trim down its workforce to respond to the declining nickel prices.

“As much as the company regrets this turn of events, metal prices are beyond the company's control and rationalisation was inevitable if Albidon was to continue its operations at Munali for the benefit of all stakeholders,” stated Grant Pierce, Albidon Zambia Limited's general manager. “The total number of employees affected is 53, not 271 as reported on Monday.”

Pierce stated that the company acted in accordance with the country's labour laws.

“Accordingly, management had no choice but to restructure its operations and reduce staff numbers. This reduction follows a previous reduction in expatriate and contractor labour following completion of construction activities and a reduction in staff at Albidon's corporate office in Australia,” stated Pierce. “The company has acted in accordance with Zambian labour laws on advice that the redundancy provisions and procedures under section 26 B of the employment Act, chapter 268 of the Laws of Zambia, relate to oral contracts only and therefore do not apply to Albidon employees as they were engaged on written fixed term contracts of service. Any employees not entitled under the terms and conditions of their contracts to a redundancy payment, were in fact paid an ex-gratia redundancy package regardless.”

He stated that it would not ramp up to full production until the end of March 2009, coinciding with the drop in nickel prices.

“Projections by experts are that low nickel prices will continue for the foreseeable future. Albidon was not in production to enjoy higher nickel prices during the mining boom. Furthermore, Munali has not reached a financially viable position and cannot do so unless significant cost savings can be achieved immediately,” stated Pierce.