Glencore's Plans to Close Zambian Copper Mines Rejected by Zambian Government -- Update
07 Abril 2020 - 12:54PM
Dow Jones News
By Nicholas Bariyo
Glencore PLC plans to suspend copper output in Zambia for three
months after it declared a force majeure related to at least two
mines amid the worsening economic carnage caused by the coronavirus
pandemic, said Richard Musukwa, minister of mines and mineral
development, on Tuesday. The Zambian government has rejected the
plans, he said.
Glencore's unit in Zambia, Mopani Copper Mines, said in a
statement that halting operations will help protect the company's
value and preserve future growth projects when market conditions
improve.
"The operating, regulatory and macroeconomic environments remain
very challenging and have continued to place significant pressure
on the business," the company said. "Mopani's situation has been
further impacted by the critical disruptions to international
mobility, transportation and supply chains arising from
Covid-19."
According to Mr. Musukwa, the government has rejected the
company's plans to close the mines because the reasons being cited
are not adequate and "do not conform with the law."
Glencore's decision comes days after it announced that it was
reviewing its Zambian operations to minimize costs amid the
uncertainty caused by the coronavirus pandemic.
Mr. Musukwa said the government won't let the commodities giant
hastily close operations and cut over 1,100 jobs. Glencore produced
around 120,000 tons of copper at its Zambian units in 2018. Until
the current disruption, the miner hoped to produce between 50,000
to 70,000 tons of copper at its operations this year, according to
company officials.
"The Ministry is not aware of any event that has happened...
which makes mining impossible," Mr. Musukwa said. "The measures
taken by government to mitigate the effects of Covid-19 have
hitherto not been a lockdown but steps to allow commerce to
continue in the country, especially the mining sector," he
said.
Last year, Glencore closed its giant Mutanda mine in the
neighboring Democratic Republic of Congo amid sliding metal prices.
Copper and cobalt prices have taken a hit since late last year,
amid concerns over the global economy and the trade war between the
U.S. and China. The pandemic has compounded mining companies'
woes.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
(END) Dow Jones Newswires
April 07, 2020 11:39 ET (15:39 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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