May 24 (Bloomberg) -- Vedanta Resources Plc, the metals and oil producer controlled by billionaire Anil Agarwal, said its Zambian unit plans to cut 24 percent of the workforce after costs rose and copper prices dropped.
Konkola Copper Mines Plc will reduce employees at its operations in Africa’s biggest producer of the metal by 2,000 from 8,263, the Chingola, Zambia-based company said in an e-mailed statement today.
Mining companies are seeking to cut jobs and scale back projects as costs rise amid falling metal prices. Rio Tinto Group has said in the last month that it’s cutting posts in Mozambique and London, while Anglo American Platinum Ltd. has proposed eliminating 6,000 positions at its South African mines. Barrick Gold Corp., the biggest miner of the precious metal by sales, said this week it’s considering shrinking in size.
Copper for three-month delivery has slumped 8.3 percent to $7,273 a metric ton in the past 12 months in London trading. KCM, as the company is known, said labor and electricity, its two key costs, have been “increasing constantly and substantially.”
“With the depression in the copper price, KCM needs to make business changes to remain economically viable,” the company said in the statement. “Regrettably, this means reducing staff numbers as many of the upgrade and expansion projects come to an end.”
Vedanta fell 5 pence, or 0.4 percent, to 1,281 pence by the close in London. The stock has gained 11 percent so far this year.
Copper contributes 70 percent to Zambia’s exports and is the biggest driver of foreign direct investment, according to Standard Bank Group Ltd. Glencore Xstrata Plc and First Quantum Minerals Ltd. also have copper mines in the country. Zambia produced 668,000 metric tons of copper in 2011, according to the U.S. Geological Survey.
Zambia has a 14 percent unemployment rate, the state-owned Zambia National Broadcasting Corp. reported in July. KCM said it will make “every effort” to help find new jobs for its workers. The company is 20.6 percent owned by ZCCM Investments Holdings Plc, Zambia’s state-controlled mining-investment firm.
Vedanta, which reported on May 16 that full-year net income more than doubled to $157.4 million, said sales from its Zambian copper mines rose 1.9 percent to $1.74 billion last year.
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