April 7, 2020 / 11:17 AM / 2 months ago

UPDATE 3-Coronavirus impact sees Glencore Zambian unit shut copper mines

* Zambia rejects Glencore’s declaration of force majeure

* Mopani Copper Mines to shut for three months starting Wednesday

* Mines minister says 11,000 jobs at risk

* Minister accuses MCM of “fishing for reasons” to lay off staff (Updates with Mopani Copper Mines statement)

By Chris Mfula

LUSAKA, April 7 (Reuters) - Glencore’s Zambian unit Mopani Copper Mines (MCM) will shutter its mines on Wednesday following disruption from the COVID-19 pandemic and low copper prices, it said in a statement, after the country’s mines minister earlier criticised the closure.

“In addition to the impacts of a rapid decline in the copper price, Mopani’s situation has been further impacted by the critical disruptions to international mobility, transportation and supply chains arising from COVID-19,” the company said.

Zambia’s mines minister earlier said MCM had declared “force majeure”, a clause in contracts that allows contractual obligations to be ignored because of unavoidable circumstances.

He questioned, however, whether there were legitimate grounds and said the government would block the mine shutdown, which he said would put 11,000 jobs at risk.

The MCM statement did not mention “force majeure” and a Glencore spokesman declined to comment.

“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,” Musukwa said in a written statement.

“This situation does not amount to force majeure,” Musukwa added, saying he was unaware of any events beyond MCM’s control that made mining impossible.

‘FISHING FOR REASONS’

Musukwa also said Glencore did not provide the Zambian government with the required 24-hours’ notice of the closure and he accused the company of seizing an opportunity to lay off staff.

“We are a pro-poor government who were elected to ensure that Zambian workers are protected and where there is justification we will allow the laying off of people but not in this situation where we clearly have MCM fishing for reasons to lay people off,” Musukwa said.

In its statement, MCM said it was engaging with Zambia’s government and unions about continuing its commitments to the workforce during care and maintenance, an industry term for a halt to mining operations during which only essential repairs are done.

The miner said it expected permanent Zambian employees, excluding management, to be sent home on their base salary while unionised contractors will receive an “ex gratia” payment.

It said employees and their dependents would receive healthcare and the company would remain committed to its corporate social responsibility projects.

MCM on March 20 announced a review of its business to reduce spending in response to lower copper prices and uncertainty caused by the pandemic.

Benchmark prices for copper have fallen around 17% so far this year as the novel coronavirus leads to demand destruction worldwide.

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 ZCCM-IH. (Reporting by Chris Mfula; writing by Helen Reid and Mfuneko Toyana; editing by Jason Neely, Kirsten Donovan, Susan Fenton and Barbara Lewis)

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