DRC’s Gecamines to cut 6 000 jobs

 

Windhoek – The Democratic Republic of Congo (DRC)’s state mining company will cut around 6 000 jobs ‑ more than half its workforce – as it struggles to finance a bloated wage bill.

The sprawling DRC state miner, once the pride of Africa in its heyday, will trim its workforce to around 5 000 from 11 000, if it secures funding to pay retrenchment packages.

Gecamines requires around US$160 million to fund the retrenchment process, and failure to secure financing means it would continue with the workers on its payroll, chief executive Ahmed Kalej Nkand said in an interview recently.

The state miner finds itself in “quite a difficult situation as it does not have the necessary funds to pay retrenchment packages” said Nkand, adding that a week-long strike at the miner’s Kolwezi operations was partly to do with its oversized workforce.

The company would have to secure financing from external sources to push through with the retrenchment process, Nkand said.

“Workers are aware that we have to undertake this but we don’t have a date yet when we will start the retrenchment. 

We are having some good discussions with people whom we think can finance this,” Nkand said.

Gecamines has in the past struggled to finance its bloated wage bill and has on numerous occasions resorted to raising debt to pay workers.

The retrenchment is part of the state miner’s five-year strategic plan under which it also aims to raise output of copper to more than 100 000 tonnes by 2015.

Part of the five-year strategic plan also involves Gecamines establishing standalone mining entities by buying out its international partners.

A case in point is Gecamines regaining control of Deziwa and Ecaille C, copper and cobalt concessions, which have potential to produce 200 000 tonnes of copper per year, last year, after buying out Copperbelt Minerals Ltd, which held a 68 percent stake.

Workers, who were on strike this past week, are being paid their outstanding wages and some have started returning to work, Nkand said.

“There was a delay in payment of wages but the workers have been paid now. We experienced cash flow problems this past month,” he said.

Gecamines seeks to trim down its bloated workforce and remain with around 5 000 workers, Nkand said. La Generale Des Carrieres et des Mines (Gecamines) was once one of the world’s biggest copper producers, shipping 476 000 tonnes in 1986. Years of mismanagement and Congo’s intractable wars reduced the company to a shell of its former self.

“In the past, Gecamines used to employ more than 36 000 workers and ever since production started falling down to 7 000 tonnes around 2000 from 476 000 tonnes in 1986, we have had to continuously retrench,” Nkand said.

The “collapse of production the company faced in the past was not matched with reduction in the number of employees”, Nkand said. “It has become very hard for the company, to maintain equilibrium; we have to reduce the workforce,” he said.

Gecamines has received help previously from the World Bank, which in 2002 helped finance a retrenchment cutting 10 655 jobs, as the heavily indebted miner battled to stay afloat.

Gecamines targets to produce 60 000 tonnes of copper this year, up from 41 000 tonnes in 2013. Output for cobalt is expected to be slightly less than 2 000, Nkand said.

The miner has not secured financing for its Deziwa and Ecaille C projects, which contain 4.85 million certified tonnes of copper and 401 900 tonnes of cobalt reserves.

To get the projects going “is a matter of securing financing”, Nkand said.

“We [are] structuring financing for the plant and are on track, [and] we are having good discussions with some banks and some potential financiers. By the end of the year, we might start work on the processing plant,” Nkand said, but could not disclose the names of the potential funders.

June 2014
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