African countries’ over-reliance on resources is causing ripple effects as mining companies look to retrench staff and suspend production with plunging commodity prices making business unsustainable. Yesterday Zambia threatened to suspend Chinese-owned Luanshya Copper Mines if it did not reinstate workers, while Glencore suspended production at mines in both the Democratic Republic of Congo and Zambia. The union at Glencoreâs mine in Zambia now says the group also plans to cut 4,300 jobs. South Africa is also part of the equation, with analysts predicting that 19,000 jobs could be on the line. The impact on economic growth and potentional social unrest are mounting and this over-reliance highlights the need for African countries to diversify and build new sources of income. The problem is that this is a lot easier when the times were good, trying to reverse a trend when the chips are down is no easy feat. â Stuart Lowman
by Sibongile Khumalo
As mining companies in resource-rich Africa bleed jobs due to plunging commodity prices, the ripple effect of redundancies has raised concern about social unrest amid declining economic growth.
Top mineral-producing countries like South Africa, Zambia and the Democratic Republic of Congo have seen cash-squeezed companies slash workforces, shut operations and reduce capacity.
In South Africa, where mining has long been a critical source of jobs, unions say 19,000 jobs are on the line.
Most of the country’s current mining layoffs are in the platinum sector, which has seen a price drop of about 40 percent since 2011, while the gold sector has also been badly hit.
Read also:Â Glencore CEO Glasenberg: Impossible to read China or bottom for commodities
“We are in crisis. Companies can’t just let go of so many people,” said Joseph Mathunjwa, the leader of the radical Association of Mineworkers and Construction Union (AMCU).
AMCU led the five-month strike over higher wages at Lonmin in Marikana in 2012, which became a bloody symbol of the price of industrial unrest.
Thirty-four miners were killed at the platinum mine when police opened fire during a violent wildcat strike, in a tragedy that badly shook South Africa’s post-apartheid consensus.
Zambia and the DR Congo have also suffered from a sharp decline in international copper prices, which have slumped by 25 percent during the first eight months of 2015, compared to the average price in 2014.
“The contracting metal prices, especially copper and platinum, will continue to pressure companies to cut their costs,” said Andrius Balsys, industry analyst at Euromonitor International.
Balsys said, in addition to job cuts, companies were “expected to re-evaluate expansion projects more carefully” and may halt those in the pipeline.
Switzerland-based Glencore this month suspended production at copper mines in Zambia and the DR Congo, as the company reels from what it described as the worst commodities market since the financial crash of 2008-2009.
The Congolese government has urged Glencore to “respect its commitments” to the project and resume production.
Glencore’s Mopani mine in Zambia is the largest employer in the country’s mining sector, with a workforce of 10,000.
Copper is the biggest foreign currency earner for Zambia, where the local kwacha has been in free fall.
– ‘Over-reliant’ on mining –
Chinese-owned Luanshya Copper Mines also suspended operations, rendering some 1,200 workers jobless.
“The African mining industry’s challenges have to be seen in the global context of a slowing China and weak commodity prices,” said Sarah Boumphrey, head of strategic insight at Euromonitor International.
“The difficulty in Africa is that many governments are over-reliant on the sector as a source of export and government revenue.”
Read also:Â Nedbank: âToughâ the new normal in African mining project finance
The commodity crunch came as South Africa’s mining sector was suffering from prolonged strikes, escalating wage demands and regular electricity cuts that many companies blamed for poor profits.
The industry, which has its roots in colonial times, relies on migrant labour from neighbours like Mozambique, Malawi, Lesotho and Swaziland — making the impact of redundancies a regional problem.
South African President Jacob Zuma’s government has tried to step in, bringing together mine bosses and unions to find ways to avert job losses, in a country with a 25 percent jobless rate.
“It is our collective responsibility to resolve the challenges as the mining sector is strategic to the South African economy,” Zuma told a meeting between unions, companies and the government this week.
The parties have signed a pact which calls for alternative jobs for redundant workers and for the selling of troubled mines, as opposed to abandoning operations.
But the hard-line AMCU has refused to sign up with any government-led deal.
Johannesburg-based labour mining analyst Mamokgethi Molopyane told AFP that the turmoil in the sector could not have come at a worse time.
“The economy is ailing, unemployment is high, with increasing food prices,” she said.
“The massive job loses are certainly going to deepen the poverty levels and have a ripple effect.”
The collapse of mining employment is not new — South African Chamber of Mines data emerged in May revealing 35,000 job losses in the gold, platinum and iron ore sectors between 2012 and last year.
Further mass unemployment from the mines would pose a fresh headache for many African nations.
The social risk was highlighted earlier this year in South Africa in a renewed bout of deadly xenophobic attacks by locals targeting migrants in unrest driven in part by lack of jobs.
© 1994-2015 Agence France-Presse
From Bloomberg
By Matthew Hill
(Bloomberg) — Mopani Copper Mines Plc, the Zambian unit of Glencore Plc, plans to cut about 4,300 jobs, according to National Union for Miners and Allied Workers President James Chansa.
The company cited lower copper prices, an electricity shortage and unpaid value-added tax refunds as the reasons behind its decision during a meeting with union leaders on Monday, Chansa said by phone after the talks.
âWe have said no to this idea and weâve instead asked them to dialog with us and find a better solution,â said Chansa, whose union has about 2,400 members at Mopani.
Glencore/Mopani stopping copper production in #Zambia: really bad news for the country!
â James Thornton (@UKThornton) September 7, 2015
A local spokesman for Mopani wasnât immediately able to comment when contacted by phone. Calls to government officials including Mines Minister Christopher Yaluma and Labour Minister Fackson Shamenda didnât connect.
Mopani is the biggest mining employer in Zambia, Africaâs second-largest copper producer, with 20,000 workers, half of them contractors. Glencore plans to suspend its operations in Zambia and at Katanga Mining Ltd. in neighboring Democratic Republic of Congo for 18 months, the company said Sept. 7. Katanga Mining will retain 80 percent of its workforce during the halt, the company said last week.
Mining Threat
Chishimba Kambwili, a Zambian government spokesman, on Sunday threatened to suspend the mining license of CNMC Luanshya Copper Mines Plc if it didnât rescind a decision to halt operations at its Baluba mine, where it sent over 1,600 workers on leave. Glencore was yet to officially notify the government of its intentions, Kambwili said on state television.
Power cuts after drought reduced water levels at hydro- power dams and weaker copper prices have put pressure on the mining industry in Zambia, which is Africaâs largest copper producer after Democratic Republic of Congo.
Read also:Â Capitalism 101 lesson for Zambia, DRC as Glencore kills their copper goose
Mopaniâs workforce reduction will probably be directed at employees and the number of cuts could grow if contract positions are also eliminated, Chansa said. The company told the union it would write to inform the governmentâs labor department on Monday about the decision, to give it the legal 60 daysâ notice before the retrenchments can take effect, he said.
Mopani will continue with capital projects and it may keep some of the more profitable sections of the mine in production, said Chansa.
Zambian President Edgar Lungu plans to meet mining unions to discuss “pressing” issues, state-run ZNBC reported on Monday, citing Chanda Kabwe, a district commissioner in the Copperbelt province. He declined to say whatâs expected to come of the talks.
