Glencore Zambia Unit May Fire 4,700 Workers Amid Power Spat

(Bloomberg) -- Glencore Plc’s copper unit in Zambia said a dispute over electricity fees that has already led to reduced power supply may result in the dismissal of 4,700 workers.

Copperbelt Energy Corp. lowered supplies to Mopani Copper Mines after the company refused to pay new power prices introduced by the government at the start of the year. Mopani said the fee increase wasn’t part of its agreement with Copperbelt. Mopani, which employs about 15,000 people including contractors, has notified the government of the planned job losses, Labor Minister Joyce Nonde-Simukoko said by phone.

“It has become necessary for Mopani Copper Mines to curtail some areas of its operations due to the restriction of power,” the Glencore unit said in an emailed statement on Tuesday. “We expect that we shall effectively have to close several areas and our scaled-back operations may affect a total of 4,700 direct employees.”

Zambia said it raised power prices because it needs to pay for imports and electricity from private producers. All other mining companies in Africa’s second-biggest copper producer have agreed to pay the new tariff, according to the government. First Quantum Minerals Ltd., which operates the continent’s biggest copper mine in Zambia, initially rejected the increase and had its power cut. Supplies were restored this week after it agreed to the new prices.

Daily Loss

With reduced electricity, Mopani is losing $3 million a day, Energy Minister David Mabumba said Monday, urging the company to reach a deal with CEC, as Copperbelt Energy is also known. The company had its supplies cut to 94 megawatts from 130 megawatts.

Nkole Chishimba, president at the Mineworkers Union of Zambia, urged Mopani to rethink its decision and to not “sacrifice” its employees.

“Government, CEC and Mopani must find a permanent amicable solution,” he said. “For us, even one person that is laid off as a result of power restrictions will not be allowed.”

The government should revoke Mopani’s mining license if it proceeds to fire workers, James Chansa, president of the National Union of Miners and Allied Workers, said by phone.

“If the decision remains as it is, we appeal to our government to withdraw the mining license from Mopani, because then they are not caring investors,” he said. “We hope that in this case the solution will be sought.”

Copperbelt and state-owned utility Zesco Ltd. had an interim court order that Mopani obtained overturned on Tuesday “for irregularity,” CEC said in an emailed statement. Mopani’s power-supply agreement provides for negotiated and industrywide tariff revisions, the company said.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director of Glencore.

To contact the reporters on this story: Taonga Clifford Mitimingi in Lusaka at tmitimingi@bloomberg.net, Matthew Hill in Johannesburg at mhill58@bloomberg.net.

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Pauline Bax, Michael Gunn