Sunday, May 26, 2013

Govt rejects KCM's plan to sack 2,000 workers
By Misheck Wangwe and Darius Kapembwa in Kitwe
Sat 25 May 2013, 14:01 CAT

KONKOLA Copper Mines (KCM) plans to lay off 2,000 permanent employees across all its operations.

But mines deputy minister Richard Musukwa says the government has rejected KCM's plans and has further challenged the company to surrender the mine to the state if they have failed to run it.

In a letter dated May 23, 2013 addressed to the Mineworkers Union of Zambia (MUZ), the National Union of Miners and Allied Workers (NUMAW) and United Mineworkers Union of Zambia (UMUZ), KCM vice-president for human capital David Kaunda stated that the company had been impacted by a number of economic and legacy issues that had made it imperative to review its operations for its continued viability.

"The challenges the company faces include; the downward trend of the price of copper at the London Metal Exchange from highs of US$9,000 per tonne to an average of US$7,000 with general market focus expectations being subdued prices for the foreseeable future," he stated.

Kaunda stated that the over 200 per cent increase in petroleum products in the last eight years, propelled with a sharp rise in the cost of tyres, chemicals and explosives was another factor.

Kaunda stated that the other challenge was the high cost of labour that had increased by over 220 per cent in the last eight years.

"The gradual increase in the company's electricity bill which had increased by over 60 per cent of total production cost since 2008, the impact on operations arising from the implementation of statutory instruments numbers 32, 33 and 78 and the charges implemented under the national budget as regards capital allowances and increase in mineral royalty tax by six percent is another challenge," he stated.

Kaunda stated that these issues had not only placed serious challenges on the company's cash flow, but had resulted in "a very unsustainable cost of production".

Kaunda stated that the high cost of production had placed KCM in the 98th percentile of the global cost curve index for mining companies.
"In this regard KCM regrets to advise that the board and management has decided to reduce 2,000 permanent jobs across its operations, in a bid to streamline and sustain operations. These job cuts will take effect from the date of this notice as provided under the laws of the country," the letter read in part.

Kaunda further stated that KCM appreciated the government's intention to ensure a wider spectrum of society benefit from the national treasury, but that the above measures needed to be undertaken for continued sustainability of the company.

And in a statement issued by its public relations manager Joy Sata, KCM regretted its decision to cut jobs, saying the current copper prices on the world market has been steadily declining - by 22 per cent in the last year - and macro-economic trends suggest it would remain depressed.

"KCM has invested very huge sums - now over 14.3 billion rebased Zambian Kwacha (US$2.7 billion) in seven years in a process to make the company's mines, smelter, processing plants and refinery among the most effective in the world. However, with the depression in the copper price, KCM needs to make business changes to remain economically viable. Regrettably, this means reducing staff numbers as many of the upgrade and expansion projects come to an end," Sata stated. "We do have other upgrade projects and expansions planned for the coming years, and expect to create jobs for those opportunities at the appropriate time."

She stated that KCM would make every effort "to assist redundant staff find new jobs, both on an individually and on a collective basis to increase economic opportunities in the Copperbelt region and around our facilities".

"The scale and nature of these efforts will vary according to the nature of individual circumstances and the opportunities available," stated Sata. "The management of KCM sincerely regret this action but considers it necessary. The company recognises its role in helping to create and sustain Zambian jobs, to train youths, workers and professionals for the jobs of tomorrow, and to foster the development of service industries and manufacturing across the country. However, the company has to be economically viable to do this. Revenue from KCM is an important contributor to the Zambian treasury and we need to create a situation where that revenue can be protected."

But at a press briefing in Kitwe yesterday, Musukwa said KCM's plans were extremely unacceptable and only meant to embarrass the PF government.

"Government has rejected the labour reduction by KCM which they are proposing to implement. This is unsustainable because the reasons being advanced are principally pure arrogance and we will not be blackmailed by mining houses like KCM. The workers on the Copperbelt, the miners have sacrificed a lot for a long time and they brought the PF into power. I want to state clearly that we will not accept and KCM has no moral obligation to reduce the workforce," he said.

Musukwa said the government had been closely monitoring KCM's maneuvers and in the last few months, a huge number of workers had lost employment at the company through outsourced operations.

"We have seen that KCM is now trying to test the ability of the PF government. We will defend the workers, we will defend the workforce because they put in this government to ensure that their interests are protected," he said.

Musukwa said going forward, the government would engage KCM as the reasons they had stated, prominent among them copper prices and production costs, electricity and petroleum and the statutory instruments the government signed, were unjustified.

"When the copper prices are at its best, these mining companies, KCM in particular don't say anything in terms of remunerating our people and when it suits them they want to sing another song. This, my government will not allow," said Musukwa.

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