Glencore to reopen Zambia copper mines pending agreement with government
LUSAKA – Glencore will reverse its earlier decision to
shutter its Zambia subsidiary Mopani Copper Mines (MCM) if it reaches an
agreement with the Zambian government, the company said on Monday.
Glencore wanted to shutter the mine due to disruption of its
operations by the coronavirus crisis and low copper prices, while the mines
minister has said the company is "fishing" for ways to lay off
workers, and 11 000 jobs could be at risk.
The miner's statement came after Zambia's mines ministry
said Glencore had "rescinded" its decision to put MCM on care and
maintenance following a video conference between Glencore executives and
Zambian ministers.
Glencore's announcement of the temporary shutdown on April 8
sparked a backlash from the government, which said Glencore did not give it
sufficient notice and threatened to revoke MCM's mining licences.
"If an agreement is reached Mopani will re-start mining
operations and issue a notice of its intention to place the mining operations
on care and maintenance after 90 days," Glencore said.
"During the 90 day period, Mopani will continue to
engage with the government on potential solutions to its current
challenges," the company added in a written statement.
Glencore's statement struck a different tone to the ministry
- emphasising that a re-start of mining operations was conditional on an
agreement being reached.
Zambia had earlier said it "applauded" Glencore's
"gesture of goodwill" in rescinding its decision and opting for
dialogue.
Glencore said it had submitted a proposal to the government,
giving no further details.
Zambia's mines ministry earlier said MCM had "sought
relief" from government on issues related to tax and, in particular, VAT.
The ministry said MCM must deliver a "detailed
plan" on how it intends to proceed in the 90-day period and
"possibly" beyond, adding that MCM would defer some non-production
activities and cut capital expenditure in order to unlock cashflow.
The ministry also said MCM must restructure its cost profile
in order to become profitable and start paying corporate income tax.
Charles Sakanya, chief engineer at MCM, has been appointed
acting CEO after the government allowed CEO Nathan Bullock to leave the
country, the ministry added. Bullock had been briefly detained at Lusaka
airport on April 15.
MCM, which produced 119 000 tonnes of copper in 2018, is
73.1% owned by Glencore, 16.9% by First Quantum Minerals and 10% by Zambia's
mining investment arm.
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