Mines Minister Richard Musukwa said at a briefing this morning that Mopani’s majority shareholder, Glencore, had informed him of the decision via a video conference that the decision was caused by falling copper prices and disruptions in international mobility.
“Yesterday on Monday 6th April 2020 at 14hrs, we held a video conference involving Glencore Head of Copper Africa Mark Davies, Nathan Bullock CEO Mopani Copper Mine (MCM), with myself and our respective technocrats. The Glencore Executive Director informed me that the Company was going on ‘Care and Maintenance’ from Tuesday 7th April 2020 for 3 months citing 2 reasons namely the global economic challenges which have led to the price of copper falling to about US$4,800 per Tonne and disruptions to international mobility. Another reason cited was the challenge of COVID-19 in terms of putting projects on hold until key personnel can travel to the mining sites,” Mr. Musukwa said.
“Mark Davies informed the meeting that some personnel in Management would be laid off while unionized workers would obtain their salaries for the 3 months from today the 7th of April 2020, after which the situation would be up for review. A further indication was made that an ex-gratia payment of one month’s salary would be made to unionized staff employed by contractors in addition to some severance package. Later in the afternoon after the meeting, an electronic copy of a letter dated 6th April 2020 addressed to the Director of Mines and copied to my office was emailed by MCM.”
He stated that the letter claimed that the company had taken the action pursuant to section 37(1)(d) of the Mines and Minerals Development Act which provides for closure of a mine based on Force Majeure.
“For avoidance of doubt, 37 (1) of the Mines and Minerals Act cited by MCM states: ‘Subject to the other provisions of this section, a holder of a mining licence or mineral processing licence may suspend or curtail production of a mine for any of the following reasons: (a) the maintenance, installation or de-commissioning of equipment; (b) an unsafe working environment; (c) uncontrolled pollution of the area resulting from the mining operations; (d) Force Majeure; or (e) a labour dispute that disrupts the mining operations’,” Musukwa stated.
“The Ministry has studied both the letter from MCM and the oral submissions during the Video conference submission and wish to react as follows: The Government of the Republic of Zambia Rejects this attempt by Mopani to put the Mines in Kitwe and Mufulira on CARE AND MAINTENANCE because it does not conform with the Law. The reason cited of Force Majeure is defined in the Law as: ‘FORCE MAJEURE’ means an event which is beyond the reasonable control of a Licence holder and which makes the exploration or mining operations under the licence impossible. The Ministry is not aware of any event that has happened that is beyond the reasonable control of MCM and which makes mining impossible,” Mr Musukwa stated.
“Force Majeure relates to an event that can best be described as ‘AN ACT OF GOD’ which clearly is beyond the control of an employer but in this case no explanation equivalent to “An act of God has been availed.The letter from MCM and the video conferencing failed to provide clear evidence of what has happened that would trigger MCM citing Force Majeure. Fluctuations to the copper price are a constant in the mining sector and cannot reasonably be classified as ‘Events’ beyond the control of the company.”
He stated that the price of copper per tonne has been fluctuating for many years.
“MCM came to Zambia in the year 2000. Between the year 2000 and today, the price of Copper has fluctuated from as low as US$2000 to US$9900 per tonne. It is therefore surprising that the price of Copper can be cited as one of the reasons necessitating the need to claim ‘Force majeure’ because the current price is about US$4,800 per tonne. This price is not as low as some years when it was as low as US$2000 per tonne. It is therefore shocking that this circumstance of copper being at US$4,800 Per tonne can reasonably be considered as beyond the control of MCM, which had weathered worse price fluctuations in the past. This is clearly not ‘AN ACT OF GOD’ but a normal business trend,” Mr. Musukwa stated.
Copyright © 2020 ZR.