The job cuts sweeping across Zambia’s mines could get worse in Africa’s second-biggest copper producer as companies scale down operations due to electricity shortages and higher production costs, an official said on Wednesday.
An electricity shortage and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in the southern African nation.
“Some parts of mining operations will be shut down or scaled back to cope with the load-shedding (power cuts),” Zambia Chamber of Mines economist Shula Jalasi-Shula told Reuters.
“Power is used not only in mining and processing, but also in maintenance, especially in our old underground mines where power is an extremely high overhead cost. We need a reduced royalty rate to help cope with the prevailing commodity price.”
Zambia’s government in June cut mineral royalties for underground mines to 6 percent from 9 percent and those of open cast mines to 9 percent from 20 percent following an outcry by mining companies.
Glencore’s Zambian unit Mopani Copper Mines (MCM) has said it plans to lay off more than 3,800 workers due to lower metal prices and high production costs.
China’s CNMC Luanshya Copper Mines put 1,600 staff at its Baluba operation on forced leave and Konkola Copper Mines (KCM), owned by Vedanta Resources Plc also put 133 employees on forced paid leave.
Zambian power companies and mining firms in August agreed to cut power supply to the mines by 30 percent due to a power deficit which has risen to 985 megawatts (MW) in September from 560 MW in March.
Zambia’s power generation capacity stands at 2,200 MW, with the bulk produced from hydropower, but supply is often erratic.
Zambia has resorted to importing power from Mozambique and the Southern African Power Pool but this has made it more expensive to run the mines, Jalasi-Shula said.
Other foreign firms running mines in Zambia include Barrick Gold Corp and Canada’s First Quantum Minerals.