Zambian mining jobs under threat


Lusaka Many mining workers are likely to lose their jobs in Zambia in the next few years, as most mining companies seek to modernise their operations in an effort to cut costs and realise return on their investments, according to the International Council of Mining and Metals (ICMM).

A study conducted by the agency in Zambia recently, shows that 12 percent of the more than 723 000 jobs created in the sector in the aftermath of the privatisation of the mines in the late 1990s are under threat, as companies seek to replace “human labour with machines” to reduce losses and increase revenue generation.

Zambia’s four key mining companies, Konkola Copper, Kansanshi and Lumwana mines, which account for 70 percent of the total labour force in the industry, are likely to be worst-affected by 2022.

According to estimates by ICMM, employment at Konkola Copper Mines, Mopani Copper Mines, FQM's Kansanshi Mine and Barrick Gold's Lumwana Mine, where 70 percent of the current copper output is realised will go down to 37 000 workers in 2022 from 42 000 recorded in 2010.

ICMM's latest report notes that there will be a reduction in total direct employment, despite the significant increase in production because of the planned gradual modernisation of Zambia's oldest mines.

Mining firms have been investing in new technologies and have in the past threatened to trim their labour force, as a measure to cushion themselves from a drop in copper prices.

According to ICMM, the cost of production in Zambia’s copper mines is high compared to international perspectives and that underlying factors in the high costs include high cost of transportation, labour and the cost of electricity.

The older mines on the copperbelt are among the world’s most expensive to operate because they are underground and geologically complicated. This, coupled with low productivity, is forcing the miners to invest heavily to bring their operations to competitive levels as well as ensure real returns on investment.

It is envisaged that with the oncoming projects, including First Quantum Minerals’ US$2-billion Kalumbila-Sentinel mine project in north-western Zambia, US$322-million syncronorium shaft sinking at Nkana Mine and the planned deepening of Konkola Deep Mine project at Konkola Copper Mines estimated at US$1 billion, investment in the sector is poised to increase to US$15b by 2020.

ICMM realises that with the given factors, including high costs of running the mines, relatively minor changes in the economic circumstances or prices could jeopardise continued operations and risk large entrenchments.

“Policv should, therefore, be designed to address those categories of cost that are critical to the international competitiveness of the industry,” the report adds.

Recently, KCM – a unit of Vedanta Resources Plc – has indicated plans to lay off over 1 529 of its more than 10 000 workers, as it seeks to modernise operations and remain sustainable. The plans have, however, met heavy criticism with the Zambian government threatening to revoke the company’s mining licence should it proceed with its plans.

Lubambe Mine, formerly Konnoco, and one of the Greenfield mining projects also plans to modernise its operations to remain competitive on the global metals market.

However, labour unions and other interest groups, including government, are sceptical about the planned job cuts in the industry and seek a lasting solution to the impending problems should the mines effect the layoffs.

Zambia’s Vice-President Guy Scott recently raised concerned that the mining sector was creating fewer jobs despite ramping up production of the red metal and called for concerted efforts to increase job creation in the industry.

VP Scott noted that while there has been increased copper output in Zambia, less jobs were being created and urged mining companies to revisit the employment trends, as the government’s main objective was job creation.

He, however, directed mining companies to increase copper production to help the country restore its position as Africa’s number one copper producing nation, after it was surpassed by the Democratic Republic of Congo in copper outturn last year.

Media reports, citing the Mine Workers Union of Zambia president Nkole Chishimba, say any job losses in the mining sector will be regrettable.

“It will be unfortunate to have any job losses, especially if the loss is significant,” Chishimba is cited by the Post. He has urged the government to start looking at measures to cushion against the loss.

“There must be preparedness on the part of the government to find measures and systems to mitigate the reduction in employment.”

Citing Australia and Chile, Chishimba stated that the government could also devise policies to ensure that mining investors do not replace their employees with machinery. The sharp fall in international copper prices in 2008 has led to huge job losses in the Zambian mining industry as companies sought to remain competitive.

At Luanshya Copper Mine, then a joint venture of the Swiss-based International Mineral Resources and Bein Stein Group Resources of Israel, closed operations in December 2008, resulting in 1 700 retrenchments.

At the peak of production in the 1980s, the country produced about 750 000 metric tons of finished copper annually, before output dropped to 200 000 metric tons in the 1990s. Current production is about 817 000 metric tons annually, and the government projects 1 500 million metric tons in 2015.

Copper accounts for 80 percent of Zambia's foreign earnings and since 2003 has been the main driver of the annual economic growth rate of five percent.

May 2014
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