Glencore to reopen Zambia copper mines pending agreement with government

Glencore will reverse its earlier decision to shutter its Zambia subsidiary Mopani Copper Mines (MCM) if it reaches an agreement with the Zambian government, the company said on Monday.

Glencore wanted to shutter the mine due to disruption of its operations by the coronavirus crisis and low copper prices, while the mines minister has said the company is “fishing” for ways to lay off workers, and 11,000 jobs could be at risk.

The miner’s statement came after Zambia’s mines ministry said Glencore had “rescinded” its decision to put MCM on care and maintenance following a video conference between Glencore executives and Zambian ministers.

Glencore’s announcement of the temporary shutdown on April 8 sparked a backlash from the government, which said Glencore did not give it sufficient notice and threatened to revoke MCM’s mining licences.

“If an agreement is reached Mopani will re-start mining operations and issue a notice of its intention to place the mining operations on care and maintenance after 90 days,” Glencore said.

“During the 90 day period, Mopani will continue to engage with the government on potential solutions to its current challenges,” the company added in a written statement.

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Glencore’s statement struck a different tone to the ministry - emphasising that a re-start of mining operations was conditional on an agreement being reached.

Zambia had earlier said it “applauded” Glencore’s “gesture of goodwill” in rescinding its decision and opting for dialogue.

Glencore said it had submitted a proposal to the government, giving no further details.

Zambia’s mines ministry earlier said MCM had “sought relief” from government on issues related to tax and, in particular, VAT.

The ministry said MCM must deliver a “detailed plan” on how it intends to proceed in the 90-day period and “possibly” beyond, adding that MCM would defer some non-production activities and cut capital expenditure in order to unlock cashflow.

The ministry also said MCM must restructure its cost profile in order to become profitable and start paying corporate income tax.

Charles Sakanya, chief engineer at MCM, has been appointed acting CEO after the government allowed CEO Nathan Bullock to leave the country, the ministry added. Bullock had been briefly detained at Lusaka airport on April 15.

MCM, which produced 119,000 tonnes of copper in 2018, is 73.1% owned by Glencore, 16.9% by First Quantum Minerals and 10% by Zambia’s mining investment arm.