Zambia rejects Glencore copper mine’s suspension plan

Glencore’s Zambia subsidiary Mopani Copper Mines said the country’s mines ministry rejected its proposal to suspend operations because of low copper prices and disruptions caused by the coronavirus crisis.

Mopani said it would appeal against the decision and will continue mining operations pending the outcome of the appeal process.

Operations were halted at its mines at the start of April, with Mopani citing the COVID-19 pandemic and other problems, but mining resumed a month later after the decision sparked a backlash from the Zambian government.

“Mopani remains of the belief that the only way to protect the company’s value and preserve the option to deliver its growth projects when conditions further improve is to transition the operations to C&M [care and maintenance],” it said.

Zambia’s mines minister, Richard Musukwa, said the government had made it clear from the beginning that it wants Mopani to continue and said he was happy that Mopani had “responded favourably” to his call not to place the mine under care and maintenance.

Musukwa said that Mopani has cut the number of expatriates working at the mine from 94 to 49 and the company will address concerns over what he described as its high cost of production.

“We are open to dialogue because we want what’s best for the people of Zambia and Mopani is strategic to [our] economic trajectory,” he said.

Cut spending

Mopani is one of Glencore’s “focus”, or “turn-round” assets. It had been forecast to generate between 50,000 and 70,000 tonnes of copper this year but has struggled against a tough operating and regulatory backdrop in Zambia.

Glencore, which separated its African copper business from its wider copper operations last year, in March launched a review aimed at cutting spending. It said at the time that lower copper prices and uncertainty caused by the coronavirus pandemic had taken their toll.

Mopani Copper Mines, 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 ZCCM-IH.

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