Minergy indefinitely suspends operations at Masama
Mbongeni Mguni | Monday March 13, 2023 06:00
The decision announced on Tuesday evening came as the more than 300 workers employed by mining contractor, Jarcon Opencast Mining Botswana, downed tools at the mine ahead of a retrenchment planned to take effect on March 31.
"As with many businesses, when structural changes occur in a market and external demand factors influence price, operational adjustments need to be made to bring operating costs in line," Minergy CEO, Morne du Plessis said.
Jarcon Opencast Mining Botswana, which has conducted mining operations for Minergy since 2019 when Masama Mine began operating, is reportedly owed tens of millions of pula by the Botswana Stock Exchange-listed company for its services.
Jarcon has filed papers with the Commissioner of Labour and the Botswana Mine Workers Union indicating its intention to retrench more than 300 workers on March 31. Ahead of the due date, BusinessWeek is informed that mineworkers decided to stay at home while the contractor and Minergy engaged in last-minute discussions to resolve the deadlock over payments.
“What we have heard is that they have stopped production at the moment and the mining contractor has asked workers to sit at home with pay until the end of the month,” BMWU president, Joseph Tsimako told Mmegi earlier today. “We had a meeting with Jarcon and their representatives said they had given Minergy an ultimatum to reply to their requests last Friday, failing which they would stop production.”
Mmegi is informed that the financial dispute between Minergy and Jarcon has been going on for at least two years and was uncovered when the BMWU enforced an Industrial Court ruling on wages. The contractor informed the Union that it could not pay the lump sum owed from the court ruling and asked for payments to be staggered, citing the failure by Minergy to settle the bill for mining services.
The latest industrial action at Masama is not the first in the mine’s short history, as workers also downed their tools in August 2019 citing a pay dispute with Jarcon.
On Tuesday, Jarcon Opencast Mining Botswana human resources officer, Obusitswe Bahumi told Mmegi there was no information the mining contractor could share on the latest situation, as discussions were ongoing.
“There’s no concrete information about whether we are closing or not and people are still sitting in meetings about that. “The people responsible for providing any further information are in meetings,” he said in a brief interview.
Answering a question in Parliament last week, Minerals and Energy minister, Lefoko Moagi, said Jarcon’s restructuring was not “an implication of the closure of” Masama Mine.
“I can confirm that there is no such plan of closure,” he said.
The change in fortunes at Masama has come as a surprise as Minergy, in a January 25 notice ahead of its closed period, had said the thesix-monthh period to December 2022 witnessed seen sales volumes up 53% and pricing approximately 66% better than the previous corresponding period, as the global energy crisis continued to lift the coal sector.
“The remarkable increase in demand for coal and higher prices, coupled with stable operations, continue to benefit Minergy,” du Plessis said in the announcement.
Masama, which is the country’s only other coal producer after the state-owned Morupule Coal Mine, has enjoyed soaring production, sales and pricing levels, as global demand for coal has bounced back due to market disruption caused by Russia’s invasion of Ukraine.
Last September, Minergy executives said they expect that the 2022 financial year would record the company’s first period of operational profitability since its establishment in 2019.
In his statement on Tuesday evening, Du Plessis acknowledged overdue payments to Jarcon and added that operations will resume when demand for coal and pricing improve.
"There is no truth to the rumour that Minergy is closing the Masama Mine," he said.
While mining operations are suspended, sales of stockpiles will continue with Jarcon's help, the CEO said.