Glencore, Vedanta Face Up to 50% Pay-Raise Demand in Zambia

Employees at mines in Zambia, Africa’s biggest copper producer, are demanding pay increases of as much as 50 percent for 2013, the nation’s biggest mineworkers’ union said.

Talks with companies began in October and are set to conclude by the end of the year, when the current wage agreement expires, Mineworkers Union of Zambia President Chishimba Nkole said in a Nov. 23 interview. The talks affect Glencore International Plc (GLEN), which owns the Mopani copper mine, Vedanta Resources Plc (VED)’s Konkola Copper Mines unit, and Jinchuan Group’s (2362) Chibuluma mine, he said.

While pay demands at most operations are for increases of less than 50 percent, “we feel there is the justification in some cases, where the wages are very low,” for raises of that percentage, Nkole said by mobile phone en route to Kitwe, about 360 kilometers (224 miles) north of Lusaka, the capital.

Zambia produced 668,000 metric tons of copper last year, ranking it the world’s sixth-largest miner of the metal, according to the U.S. Geological Survey’s website. Output of cobalt was 6,600 tons, placing the southern African fifth in the world, it said.

Zambia’s economy will probably grow 7 percent next year and inflation won’t exceed 6 percent by the end of 2013, Finance Minister Alexander Chikwanda said Oct. 12.

First Quantum

Power supplier Copperbelt Energy Corp. (CEC) and China Nonferrous Metals Co.’s (8306) Luanshya mine are also involved, Nkole said. The talks don’t apply to First Quantum Minerals Ltd. (FM), where the Zambian Industrial Relations Court in September awarded workers a 13 percent increase this year and 12 percent in 2013, Nkole said. Frederick Bantubonse, the general manager of the Chamber of Mines of Zambia, declined to comment because his organization isn’t involved in the negotiations.

“It’s not anything, it’s the usual way we proceed,” Nkole said of the wage demands. Management will make an offer, and negotiations will follow, he said, declining to give reasons for the demands.

At the Chibuluma copper operation, about 370 kilometers north of Lusaka, workers proposed a 40 percent raise, the Zambian Post reported Nov. 20. Mine management later denied that, and Nkole said the union had demanded a 25 percent increase there. The wage bill accounts for 32 percent of the mine’s total cost of producing copper, the company said in an an advertisement published in the Zambia Daily Mail on Nov. 23.

Miners at Chibuluma, which Jinchuan bought through its $1.36 billion takeover of Metorex Ltd. last year, secured a 17 percent increase in March. Mopani awarded its employees the same percentage increase the previous month.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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