Zambia has asked Glencore International AG to surrender to the government two mining units it plans to temporarily shut down, mines minister Maxwell Mwale said.
Mwale, the Minister of Mines and Minerals development, said in a statement seen by Reuters on Tuesday that the government would not accept the closure of the Mufulira and Nkana copper mines, which owners say have been making losses since copper prices started to decline on the world market.
Last week Glencore notified Zambian authorities that it planned to cease operations of the two mines until copper prices reached the average level of $5 500 per tonne.
Copper for three months delivery on the London Metal Exchange stood at $3 710 a tonne in open outcry trade earlier on Tuesday, compared to last July’s record high of $8 940 reached before global recession fears ravaged demand for metals.
The government wants Glencore to hand over the Nkana and Mufulira mines instead of suspending operations, Mwale said.
In 2002, Anglo American surrendered to the government the Konkola Copper Mines (KCM), the country’s largest copper producer, after making losses due to low copper prices.
”The government is urging Glencore to reconsider its proposed course of action in that we have had a precedence set by Anglo American, which upon realizing it was making losses, surrendered its assets to the government,” Mwale said.
”In this regard, the government would like to urge Glencore to surrender the assets of both Mufulira and Nkana to ensure continued mining operations and avert disruption to social economic life of our people in the country.”
The global crunch has led to a decline in demand for metals, and forced several mining firms to scale down operations or to shut down their mines in Zambia, where copper mining is the country’s economic lifeblood. Copper mines are a major employer in the country of 12-million people.
Mwale said the government was keen to avoid closures at other mines, including Mopani Copper Mines, a joint venture of Glencore and Canada’s First Quantum Minerals.
In December, Luanshya Copper Mines (LCM) ceased operations at the Baluba copper mine and also at Chambishi Metals, the country’s largest copper producer and cut back 1 700 workers, citing operational problems arising from the global crisis.
Last week, Albidon of Australia placed its Munali nickel project in Zambia under care and maintenance, blaming the crisis. Workers’ unions urged the government to take over the troubled mines.
Several other mines have cut jobs in Zambia.
”[The] government cannot allow a situation where the current mine owners want only to manage the operations that are profit making and leave those that are not profit making under care and maintenance,” Mwale said. – Reuters.