- Konkola Copper Mines closing Nchanga amid low metal prices
- Shutdown adds to thousands of job losses at Zambian mines
Vedanta Resources Plc’s Zambian unit, Konkola Copper Mines, will stop production at its loss-making Nchanga underground mine and cut 2,500 contractor jobs as the metal trades near six-year lows.
Keeping the operation going would cost the company as much as $40 million in the next year and Konkola is placing it under care and maintenance to protect the financial viability of its entire business, the copper producer said. The decision takes effect Friday.
While Konkola will redeploy direct employees at the mine to other company operations, it will end contracts with companies providing non-permanent staff that will affect 1,675 people immediately and a further 825 over three months, the Vedanta unit said in an e-mailed statement Thursday.
The job cuts at KCM, as the company is also known, add to more than 4,300 retrenchments at Glencore Plc’s Mopani Copper Mines in Zambia as the southern African nation battles falling metals prices and a power crisis. The closings and cuts will hobble economic growth, which the World Bank expects to be the slowest in 18 years in 2015. Low prices and falling output will inhibit foreign exchange supplies in a country that has the world’s second-worst performing currency this year.
Zambia is Africa’s biggest copper producer after the Democratic Republic of Congo, and the metal accounts for more than 75 percent of foreign exchange inflows. Vedanta’s billionaire Chairman Anil Agarwal said Nov. 18 the slump in metal prices “is the worst I’ve ever seen.” The company plans to cut costs by as much as 25 percent, he said.
President Edgar Lungu later on Thursday said his government has no intention of taking over mines in the country that fire workers, and that it will help retrenched employees set up farms.